The November soybean futures contract at the Chicago Board of Trade rallied 2.36% yesterday, reaching $10.31 per bushel during the regular trading session. The move put beans more than 1% higher than at any time in the last three years. At the same time gold prices continued their trend upwards, with the Knight Ridder Gold Composite index rising 2.28% yesterday to reach an intra-day high of 825.26, its highest price in 27 years. According to the Market Information Machine (MIM), when soybean futures burst through their highest price across the past year whilst gold prices are strong, soybeans typically make gains across the following two weeks.
Q: What happens to soybean futures when they surpass their highest price within the last year by more than 1% on a day when the Knight Ridder Gold composite index reaches its highest level in three months?
A: According to the 11 previous occurrences of this event, EventEdge indicates that soybeans have shown a strong bullish edge that peaks nine trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the most recent occurrence of the event (Tuesday, Nov.6, 2007) is Monday, Nov. 19, 2007.
Beans rallied in 100% of the cases (11 of 11) by an average of 5.5% relative to the close on the event date. The overall return of the 11 cases is 5.5%, which, based on the close on the event date ($10.29'4), provides a target price of $10.86.
If you would like to see more details of this historical edge, go to www.markethistory.com
Scott Murani covers European energy and commodity markets from London.
