AgriVisor Soybean Advice

Friday, May 27, 2016
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Fundamental Analysis: From one perspective, it was somewhat the same old news that drove the market, mostly news surrounding Argentina.  The harvest results so far still point to a possibility output is going to fall short of the 55-56 mmt. mark that has been widely forecast.  Even the Buenos Aires Grain Exchange is sticking with its 56 mmt. estimate.  But with 72% of the harvest complete, the output hints of something in the low 50s.  Concern about the quality of soybeans/products coming out of Brazil may be fully built into prices, if not, nearly so.  Soymeal remains the strength of the soybean complex, but even though it was higher, seemed to lose its momentum today.  Export sales were good, but not exceptional.  606,800 tons of soybeans were sold last week, and 187,100 tons of soymeal.  Weather is an ever present fixture in the complex.  This week’s indication the El Nino had ended, brought with it talk/concern the Pacific could continue sliding toward La Nina, bringing production risk with it.  But at these prices, and after this rally, it may take some real weather problems, and given the moisture and forecasts, that is somewhat remote in the short term.

Tech Comment: Soymeal continues to move higher, closing over $400 again today.  It overcame targets and resistance in the $413-$415 range but quickly slid from its high, and closed under them.  Supports are not as reliable in a move such as this, but a drop under $395 would be an indication the trend might be shifting, with Tuesday’s $380.10 low on July the closest notable support.  Once soymeal stops, so will soybeans.  July moved close to psychological resistance at $11.00 when it moved over $10.91, but the quick fade and close near the day’s low hints this week’s rally may be exhausted, a situation that could lead to the 3 month rally exhausting itself.  $10.65 is the first support of importance, but it may take a close under $10.50 to trigger liquidation and a deeper slide.  In that instance, prices could quickly turn down testing support at $10.08, $10.04, or $9.86.  Once prices to turn down, look for the decline to persist into the beginning of July, the best timing for the next 16-18 week low.  You should also know that grain prices have a history of changing trend near the spring/summer holidays.  Amid any short term volatility, it’s important to remember, the action the last couple of months indicated the major trend has turned higher; no major lows are due for another 2 years.