Technically Speaking

There is a scene in the 1994 film The Shawshank Redemption (spoiler alert) where after chiseling through the prison walls with a seven-inch rock hammer, Tim Robbins' character Andy Dufresne crawls to freedom through 500 yards of sewage line. For the soybean market, the next 30 cents of rally may feel a lot like that dramatic escape, finally leaving behind the painfully low prices, which were the feature for most of the past 16 or so months.

The rally in soybean futures over the past month has been nothing short of incredible, with the most active chart covering $1.63 of ground from the Oct. 14 close to the Tuesday, Nov. 18 high. At this point, the January board has successfully filled a gap left in the most-active chart from June of 2024. While the market has made the rally look relatively easy over the past month, the 30 cents from $11.55 to $11.85 may prove much more challenging from a technical standpoint. In our analogy, if the rally thus far to $11.55 January futures has been the prison's walls, then this is the entrance to the sewage line.

Looking at a volume profile over the past two years for most-active soybean futures, we can see the upper $9.00s to roughly $10.70 was a major area of liquidity, which had trapped prices through the last half of 2024 and most of 2025. Spurred by increased buying interest from China and lower production ideas, prices finally broke free in late October. Looking ahead, the next major zone of liquidity stretches from just above $11.55 and peaks (called the point of control in technical terms) right near $11.85. Essentially, these spikes in volumes indicate areas of heightened transactions between buyers and sellers, meaning the price discovery mechanism of the futures market had successfully found "fair" value for a bushel of soybeans.

We saw through Tuesday's session the soybean market is already facing some profit-taking after prices topped out in the early morning at $11.69 1/2, an impressive effort which has, thus far, fallen just short. However, this should not be a reason for too much concern. If there is one major takeaway from this analysis it is that high liquidity areas take time to push through, stressing the importance of patience. After all, it took our protagonist Mr. Dufresne 20 years to escape from his prison. If the soybean market can gain a footing near current price levels and continue to receive fundamental support in USDA updates, then the outcome will have been well worth the wait.

Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of commodities, futures or options involve substantial risk and are not suitable for everyone.

Rhett Montgomery can be reached at rhett.montgomery@dtn.com

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