Soybeans Analysis: Lower soybean supply forecast bullish for soybean price

September 16, 2019

By IFCMarkets

Lower soybean supply forecast bullish for soybean price

Soybean output estimate was downgraded in latest WASDE report. Will the soybean prices continue rising?

United States Department of Agriculture lowered it soybean production projection in monthly WASDE report to 3.581 billion bushels, down 47 million on a lower yield forecast of 47.9 bushels per acre. Domestic and global ending stocks were also revised downward. And China announced last Thursday a massive purchase of U.S. soybeans – 22.0 million bushels, the largest single-day purchase since June. Lower soybean output and higher demand is bullish for soybean prices.

SOYBEAN rising above MA(200) 09/16/2019 Technical Analysis IFC Markets chart

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On the daily timeframe the SOYB: D1 has breached above the resistance line and the 200-day moving average MA(200), these are bullish developments.

  • The Parabolic indicator gives a buy signal.
  • The Donchian channel indicates no trend: it is flat.
  • The MACD indicator gives a bullish signal: it is above the signal line and the gap is widening.
  • The RSI oscillator has breached into the overbought zone, this is bearish.

We believe the bullish momentum will continue after the price breaches above the upper boundary of Donchian channel at 911.7. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed above the last fractal low at 858.3. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (858.3) without reaching the order (911.7), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary

Order Buy
Buy stop Above 911.7
Stop loss Below 858.3

Market Analysis provided by IFCMarkets