Soybean Futures Rally

September 8, 2020 09:49 AM
Soybean futures

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Soybeans futures closed at the highs of the week, unlike corn and wheat, as it’s certainly pricing in a much smaller 2020 crop size than what was being advertised weeks ago. However, crop condition ratings remain well above both last year and the long-term average. This means the crop isn’t a disaster from August heat like it was in 2012 and 2003.This means the soybean crop is likely to come up with the national yield at or slightly above trend line. This puts the current rally now at risk, especially since China could be slowing exports, as these prices have risen over a dollar in one month. So we still have a significant demand that’s likely to meet a still reasonably big crop. Soybeans could be at a high at this time, but support will be significant on setbacks into the 920-940 range with the Chinese buying still anticipated into the fall.

Last weekend I stated: "Major resistance is here at 950-965."  And that top side range stalled the market out through the first 3 sessions of the week, the late week surged pushed through that closing at 969. with max resistance for this run at 980-990.

Sunday night activity may be difficult to push higher, especially without continued anticipated large Chinese purchases. Weather is losing its excitement, and crop ratings which are anticipated lower Tuesday afternoon are already priced in.

Hedge alert:  Filled 8-31 at 963: Sell 35% of new crop production in the 955-965 range.

Sell an additional 25% above 962 in the Monday night or Tuesday morning session. Over $10.00 would require South American production problems at planting in late October-early December.

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About the Author

Eugene Graner is the founder and President of Heartland Investor Capital Management Inc. He is a veteran commodity analyst, and broker with 28 years experience in the industry.