Focus: Soybeans
Despite the early concerns over heavy spring rains and flooding in the grain belt, the U.S. Department of Agriculture recently raised its forecast for this year’s corn and soybean harvest. The corn yield is expected to be 154 bushels per acre, which would be the second highest recorded yield ever. The government’s soybean forecast was also raised by 2%. The higher yields are coming at a time when prices have been falling. For example, soybeans experienced a dramatic 83% rise in prices beginning in June of 2007 (see chart). Bearish ADX divergence was clearly present in the weekly chart of soybeans before the subsequent decline. After a peak of 1642 in July of 2008, prices have fallen dramatically and are now back to the 2007 breakout levels (910), completing the bull cycle.
Chart Courtesy of TradeStation
Dr. Charles B. Schaap transitioned from health care to wealth care in the nineties. He is the author of ADXcellence —Power Trend Strategies and Invest with Success—Big Profits for Small Investors. Dr. Schaap is a commodity futures strategist and recognized authority in technical analysis of the financial markets. His website is www.adxcellence.com.
