Similar to corn, I’m looking at the long-term monthly chart for a different cash soybean index due to longer history. At the end of February, this index was calculated at $13.6541 (the cmdty National Soybean Basis Index came in at $13.6534), finishing above the next target price of $13.5201. However, the cash index did post an inside range as with a monthly high and low of $13.8344 and $13.1081 within the previous month’s range of $13.8660 to $12.6742. Also, monthly stochastics have established two bearish crossovers above the overbought level of 80% since October 2020, the most recent at the end of January 2021. Lastly, the cash index looks to be deep into Wave 5 of a 5-wave uptrend that began with the low of $7.1196 during September 2018. This sets the cash market up for an interesting spring because:
- Technically, the cash index looks like it could top out over the coming months, but
- Fundamentally, the market remains incredibly bullish with
- National average basis continuing to run stronger than the previous 5 years
- Futures spreads are inverted through the 2021-2022 marketing year
A change in fundamentals could lead to a bearish reversal anytime in cash soybeans. However, if the index continues to extend Wave 5 the next potential targets are previous highs of $14.9743 (May 2014), $15.6380 (July 2013), and the big one up at $17.4764 (August 2012).