Monthly Analysis: Soybeans

2023-08-01T11:35:30-05:00August 1st, 2023|Monthly|

Sticking with the Analysis from last month: The monthly close-only chart of the cash index I track for basis and monthly available stocks-to-use continues to show a classic head and shoulder top pattern. The strong rally at the end of June looks to be a return move to the neckline, usually followed by renewed selling. We saw the beginning of this during July as the index finished near $13.52. The long-term downside target is still $10.26 (bottom dashed red line) based on range from the head (high monthly close of $16.51, May 2022) to the neckline and the breaking of that neckline at the close of April 2023.   Theoretical Positions: Short the cash soybean market. End-users could continue to go hand-to-mouth.

November Soybeans: Technically, Nov23 completed a bullish 2-month reversal at the end of June. This tells us the major trend uas turned up. However, 2-month reversals tend to be followed by a quick pullback, a move usually considered Wave 2 of a 5-wave uptrend pattern. The downside target area is between $12.47 and $11.95. This could pull monthly stochastics below the oversold level of 20% and in position for a bullish crossover.

Theoretical Positions:

  • Short Nov23 from roughly $13.5975 (October 12)
  • Previously short Nov22 from the June close of $14.58 (the completion of a bearish key reversal)
    • Bought back on October 12 at $13.96 for a gain of roughly 62.0 cents
    • Raising the short Nov23 to about $14.1275
  • Previously sold Nov22 $13.40 put options for approx. 55.0 cents on August 3
    • Stopped out at approx. 9.0 cents on September 23 for a gain of roughly 46.0 cents
  • Hedgers could look at lifting short Nov23 positions on a move to the target area this fall, or as harvest progresses.
    • Some may have lifted hedges at the completion of the bullish 2-month reversal at the end of June. If so, we need to be careful with the market heading toward harvest.
    • The guaranteed price from this past February (US) is $13.76.

The Teucrium Soybean Fund (SOYB) also looks to have completed a bullish 2-month reversal based on the strong rally at the end of June. Initial buying in futures saw SOYB explode to a high of $29.43 during early July before closing at $27.65. Frankly, the monthly chart is a bit of a mess. Theoretical Positions: Those wanting to go long might wait for a Wave 2 selloff.

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