As export growth from the US to China to the annual maximum, Soybean prices updated the weekly maximum yesterday.
This article is originally referred from IFC Markets Technical Analysis.
Soybean prices rose and updated a weekly maximum on Monday. It took place due to its export growth from the US to China last Friday, totaling 498 thousand tonnes which is about equal to the annual maximum. Over the last 9 trading days more than 3 million tonnes of American soybeans were sold to China and to “unspecified consumers”. Will soybean prices continue rising?
In April of the current year, the total soybean imports to China declined by 18% compared to the same month of 2015, totaling 7,76 mln tonnes. This is a little bit more than June 7,56 mln tonnes. The total soybean imports to China over the first 7 months of the current year were 46,3 mln tonnes, which is 3,6% more than the last year’s level. Last week, soybean prices slumped to April lows on forecasts of a large crop in the US. Independent agricultural agencies expect that it will update the historical maximum, advancing 4.06 billion bushels. Thus, the yield will be 48,8 bushels per acre. The official forecast of the US Department of Agriculture is much more modest: 3.9 billion bushels in case of yield of 48,8 bushels per acre. Soybean prices will depend on the weather and the clarification of official US forecasts. Another factor in favor of their possible increase could be the strengthening of the Brazilian real against the US dollar before the Olympics. Brazil is the second world’s top soybean exporter following the US. In July it reduced soybean exports to 5.78 mln tonnes which is 25% less than in June and 31% less than in Jully of 2015.
On the daily chart, Soyb: D1 left the downtrend as it failed to breach below the 200 – day moving average. The MACD indicator has formed the signal to buy. The Parabolic indicator still indicates sale, but its signal may serve as an additional level of resistance that must be overcome. The Bollinger bands have widen significantly which means high volatility. The RSI indicator is in the rising trend and below 50. It has formed positive divergence. The bullish momentum may develop in case wheat exceeds the last fractal high, the 1st Fibonacci level and Parabolic signal at 1005. This level may serve as a point of entry. The initial stop-loss may be placed below 200 – day moving average line and the last fractal low at 942. After opening the pending order we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 942 without reaching the order at 1005, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
|Buy stop||above 1005|
|Stop loss||below 942|
Original Source: IFC Markets Technical Analysis