Soybeans: Is enough enough for the inflation trade? ⬇️Soybeans and other agricultural commodities are beginning to show a lot of weakness as the inflation fears and bad weather begins to subside. Are we headed lower?
SOY1! trade ideas
Soybean Futures September 2021 ContractHey there. Just one question, do you see any buying pressure in the Volume Oscillator? No? Yeap me too, so we will strong on short. Price will make(finger cross) a reversal at the trendline and we will be exiting our position in the next resistance turn support.
P/S: My position was entered yesterday at 1412.6. The reason why I posted this is because some of my friend were saying that the price is currently bullish and already making a reversal. Some of them has close their position, I will stick to my plan, which I will exit at the next support area @ 1372. Option 2, I will exit if its break the trendline and has no mean to reverse down.
Good Luck
November 21 SoybeansNovember21 Beans-Daily: The upper trend line on the red down trending fork proved to be a respected area of support/resistance. Support today is in the 13.72 area. Resistance against the pitchfork for today is 14.41 area. I will keep an eye on these lines for trending support and resistance. If we move up to fill the next targets for beans, we would target price and time up to 14.52 by 7/23-7/24….
A move above the gray median line would have targets up to 16.28 with a price & time target around 8/13. *** I wouldn’t set my sights on 16.28 and hold off selling anything up to that point***
I will be focused on the 15.11 -15.45 targets if we get there. The 15.11 target could set up a “Bull Trap” reversal. **Buy stops just above the 14.80 high, but failure to carry momentum higher….
Week 29: ZSX2021 Market has not broken from the uptrend channelFor the whole week the market is still ranging within the uptrend channel.
However, as to date, we have seen a sign that the price is about to go down, we just have to wait for another final confirmation.
Overall I am bearish bias; when it is time to drop, it will go down to $12.80
Nov21 SoybeansNovember21 Soybeans - Daily: Current price finding resistance against the upper line on the red down trending pitchfork, and 62% retracement target at 13.88. Support will be the lower trend line on the gray up trending fork between 13.00 and 13.32. Targets above at 14.28 and 14.52. Any push above the median line on the gray up trend fork will allow for us to look at targets above 14.80…
Continuous SoybeansSoybean – Weekly Cont: Aug contract leading the continuous chart. **Not all end user bids offered off the August Contract**
Using the recent swing low from 12.89 for retracement targets, the 50% 14.78 target aligns with the red kijun line and will be a tough line to cross. Above take your pick at 15.23, 15.86 and 16.24. Support is 14.33, 13.78 and 12.89. Further risk against the cloud with extended risk at 12.43, 11.43 and 10.00.
Week 28: ZSX2021 Market is still in consolidationThis week update was a bit late because not much activity since the beginning of the week.
The price is still in consolidation mode, ranging tightly in up trend.
There is an opportunity to short, however the Risk Reward ratio is only around 1:1.3 which is not favorable.
We wait until the price breaks the channel and we can enter with smaller risk.
Week 27: ZSN2021 A quick short opportunity Last week the support level did not break (yellow zone) and resulted a huge jump.
Early this week we saw the sellers were back in the market, however they didn't have enough momentum to push the price lower.
Based on today's chart reading, $14.63 is a good area to sell.
Stop Loss will be at $14.83 and Take Profit is at $14.20
This will give us RRR = 2.17R
Bullish momentum is still strong, so this will be a quick trade.
Week 26: ZSN2021 Consolidation weekIf you are still holding your short position from last week, it is time to manually close it.
The price was stopped at $13.28 area where it formed "W" or mini double-bottom; does this mean a reversal to be bullish?
My upper limit is at $13.82, if the price breaks and close higher that $13.82, then YES, it is likely to be bullish.
However, if the price broke the yellow box / support level, then downtrend will continue.
Therefore, this week we just wait until it breaks, then we follow the market direction.
Week 25: ZSN2021 We are still on Shorting mode.Last week prices went down hard, I didn't anticipate to go down that fast. It broke the structure and the major trend is now a Down Trend.
There more opportunity to short the market until it reaches $12.93
Here is my trade this week:
Sell Limit at $14.37 area (you can short now too)
Stop Loss at $14.76
Take Profit at $12.93
Risk Reward Ratio = 3.68R
Good luck!
ZSX2021 November21 SoybeansNovember21 Soybeans: Thursday’s low at 12.40 fell short of the primary target at 12.30. If 12.40 is confirmed as a swing low, I will look at upside targets more closely. Risk below still remains between 12.30 and 12.22. Look for resistance above against any of the lines drawn. If the 12.40 low holds, nearby resistance at 13.32, 13.60 and 13.88
ZSN2021 July21 SoybeansJuly Soybeans – Weekly: Last week’s big ugly red bar was the first weekly close below the blue Tenkan and the red Kijun line since August of 2020. Support is last week’s low at 13.23.
Resistance is the red Kijun and 38% retracement at 14.55 and the blue Tenkan and 50% retracement at 14.95
Soyboy FuturesThe amount of Soyboys in this space is an inverse function of hyperinflation. the more soy we need = the more Soyboys you will have to put up with in your local dystopia dispensary.
in otherwords:
Have you seen the wycoff accumulation on Soy boys? this is looking like accumultion and it is being rejected at a critical zone (historically and current msm narrative speaking as well); all on the cusp and heels of G7 and inflationary fears from the dollar.
but dw fedday makes anything right as rain.
look at Gold, silver, and most other commodites.
the dollar is a dying asset and this sign of strength is your red flag.
Beans in the teens!If you look back to the lows of '06 to the highs of '08 ( $5 to almost $16) to the all time highs in 2012 of almost $18 you will see that 6 months in to this raging bean rally there is till time to get on board and enjoy the ride higher. Although I have traded in / out of the market for months, I would have been better served to have gotten long and stayed that way - period. There's room to run for many technical and fundamental reasons as well. I encourage a healthy debate, in the comment section. Thanks and good luck to both sides of the trade. That's what makes a market.
New Crop Beans Probe Below the Teens - Did Lumber Give the Clue?Last week, the commodities sector experienced more than a speed bump after an extended period of price appreciation. As July soybeans roll to the next active month and the new crop November contract in the futures market, the price became a falling knife before recovering on Friday, June 18.
Beans tank
They were not the only commodities
A Fed hint made its transitory wish come true
Lumber continues to give clues as it moves first
The legacy of COVID-19 will live on- Bull market dips can be brutal
July beans have been in the teens for most of 2021. New crop November beans rose into the teens in April and remained there until mid-June when they briefly fell below $13 per bushel.
While the weather across the critical growing regions is the primary factor driving the price of the oilseed futures, all commodity prices fell last week. Ironically, lumber has been signaling a correction was on the horizon since mid-May. The illiquid lumber market has a habit of leading commodity prices, making it a crucial sentiment benchmark. I never trade lumber because of its limited liquidity, but I watch the price action like a hawk.
Beans tank
Nearby CBOT soybean futures reached a high of $16.6750 in May 2021.
The chart shows the rise to the highest price since September 2012 when soybean futures reached a record $17.8900 peak. Chinese demand, the weather conditions and COVID-19 in South America, and falling global inventories pushed the price to the high last month. Nearby soybean prices have been mainly in the teens throughout 2021, only dipping to a low of $12.98 in January.
The recent selling took the price down to a low of $13.2350 per bushel last week before it covered to around the $14 level. New-crop November soybeans have been trading in backwardation to the nearby July contract. Backwardation is a condition where nearby prices are higher than deferred prices. Backwardation is a sign of tight supplies or a market deficit.
The market has remained optimistic that the 2021 crop year will produce enough oilseeds to meet the growing global demand.
The chart of soybeans for delivery in July 2021 minus November 2021 shows the backwardation narrowed from a high of $2.29 per bushel in January to the 82.25 cents level at the end of last week. However, at 82.25 cents, the July beans continue to command a hefty premium to the new crop November beans.
The chart shows that the November futures contract entered the teens, with the price rising above $13 per bushel in late April and remained there until last week when it probed under the level. However, the November contract recovered, and new crop beans were still in the teens as of June 18. At $13.15, soybeans for November delivery corrected by over 11% from the June 7 high at $14.80 per bushel.
They were not the only commodities
Soybeans were not the only commodities to experience selling over the past weeks. Corn and wheat prices decline. Copper, a leading metal, fell from a record high at nearly $4.90 per pound in May to settle below $4.16 last week, a 15% decline. Palladium reached an all-time high of $3019 per ounce in May and was trading around the $2470 level on June 18, over 18% lower. Metals, industrial, and agricultural commodities fell sharply last week.
The only markets that remained near the recent highs were crude oil and natural gas. The strength in the energy sector is likely a function of the shift in US energy policy, causing tighter regulations on drilling and fracking at a time when demand is booming in the wake of the global pandemic.
A Fed hint made its transitory wish come true
The selloff in commodities began before the June 10 Fed meeting but selling accelerated in its aftermath. The Fed did not change monetary policy. The only concrete change was a slight five basis point increase in the reverse repo rate. However, the central bank shifted its rhetoric from “not thinking about thinking about” rate hikes or tapering QE. The FOMC members decided it was an excellent time to begin thinking. The May CPI data that shows inflation rising by 5% and the 3.8% rise in core inflation, excluding food and energy, was enough for the central bank to hint that rates could head higher and QE could begin to taper in 2022. The prospects of a less accommodative Fed caused a cascade of selling in markets across all asset classes.
On Friday, June 18, hawkish comments by Fed Governor James Bullard caused selling in the stock market. While the Fed continues to characterize rising inflationary pressures as “transitory,” the more hawkish comments and forecasts may have made its characterization comes true, at least in the short term. The correction in commodity prices will likely cause a decline in inflation data over the coming months if prices continue to fall or sit around the current levels.
Lumber continues to give clues as it moves first
The illiquid lumber futures market provides the commodity market with clues over the past months on the up and the downside. Before 2018, the lumber price never traded above $493.50 per 1,000 board feet, the 1993 high.
The annual chart dating back to 1972 shows the explosive move in lumber that took the price to a high of $659 in 2018, $1000 in 2020, and $1711.20 in 2021.
The weekly chart shows lumber futures rose above the 2020 high in mid-February 2021, months before other commodity prices reached record or even multi-year highs. Lumber peaked at $1711.20 during the week of May 10 and became a falling knife. The turn came before other commodity prices corrected dramatically in June.
Lumber may be an illiquid market that does not offer trading or investment opportunities, but it has been an impressive barometer for the future path of least resistance for raw material prices. I never trade lumber, but I watch the price action in the wood market like a hawk.
Last week, nearby lumber futures fell to a low of $855.10 per 1,000 board feet and settled below the $900 level on June 18. Lumber has nearly halved in price from the early May high, just six short weeks ago. Put lumber on your radar as a critical indicator of commodity market sentiment. Over the past year, lumber rallies have been a harbinger of bullish trends in the raw materials asset class. Falling lumber prices have signaled that corrections are on the horizon.
The legacy of COVID-19 will live on- Bull market dips can be brutal
Meanwhile, the correction in commodities was brutal last week, but the asset class remains in a bullish trend since the March and April 2020 lows. Even the most aggressive bull markets rarely move in straight lines. The higher prices move, the odds of brutal corrective periods rise. The cure for high prices in commodities is those high prices as producers increase output, and demand tends to decline when raw materials become too expensive for consumers.
We are still in the early days of the post-pandemic era. The tidal wave of central bank liquidity and tsunami of government stimulus continue to overwhelm the financial system. The CPI data told us that inflation is a clear and present danger. Whether it is “transitory” is a question that remains. Real estate prices are soaring; the stock market remains near its all-time high. Digital currency prices suffered severe corrections, but they remain far higher than 2020 levels. The US dollar may be bouncing against other world currencies, but that could be a mirage. Measuring the dollar’s value against other foreign exchange instruments provides an incomplete picture. If all fiat currencies are losing purchasing power, the dollar may only be the healthiest horse in the foreign exchange glue factory.
Inflationary pressures will not go away overnight. Even if the Fed begins increasing the short-term Fed Funds rate and tapers QE, the liquidity in the financial system remains at unprecedented levels. Government spending is not likely to decline under the current administration in Washington, DC.
The impact of liquidity and stimulus in 2008 drove commodity prices higher until 2011-2012. The levels in 2020 and 2021 are far higher than in 2008. As I recently wrote, Albert Einstein defined insanity as doing the same thing repeatedly and expecting a different result. Professor Einstein would likely be a buyer of commodities on the current price dip as we are still in the early days of the bullish cycle if the period from 2008-2012 is a model.
As vaccines create herd immunity to COVID-19, the virus will continue to fade into the market’s rearview mirror. However, the legacy will live on for years. I will be watching lumber for clues. When the wood price hits bottom and turns, it could provide another hint that commodity prices will reach higher lows sooner rather than later.
When it comes to the soybean and other agricultural markets, rising inflation is bullish, but Mother Nature will dictate the path of least resistance for prices. The 2021 crop will be a function of the weather conditions across the fertile plains in the US and other growing regions in the northern hemisphere over the coming weeks. Commodities remain in bull markets, despite the recent selloff on the back of the Fed’s rhetoric. Any significant shift in monetary policy remains months away. A rising dollar and higher interest rates could cause lots of turmoil in markets across all asset classes, but the damage from the liquidity and stimulus that stabilized the economy and financial system will last for years to come. I remain a commodity bull, despite the recent selloffs and view them as buying opportunities.
Picking bottoms in markets is a fool’s game, so we trade with the trends. However, the odds and fundamentals favor higher lows in the inflation-sensitive asset class.
Sign up for the free Monday Night Strategy Call using the link below!
Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility , inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
Week 24: ZSN2021 A short consolidation prior going down againLast week the seller fought back with momentum, it broke the support level $15.00 and going down further.
Normally after a series of drop in price, we will wait until the price normalizes (this is where "short" trader will take profit by buying back).
From the current price movement, we can wait and ready to short again at $15.00 area and our target to take profit is at $14.40.
Week 23: ZSN2021 Be ready to short at $1585Last week price broke the channel and continuing upward consolidation.
Yesterday we saw an aggressive move by the Seller, however, it doesn't mean that the price will plunge straight-away.
However, feel free if you want to short it now; in my view, the best level to short is at $1585 level/area. That's where your RR is more favourable.
So here is the signal for our discussion:
Pending Short Order at $1585
Stop Loss at $1616
Take Profit at $1530
RRR = 1.56R
Good luck!
Week 22: ZSN2021 Consolidation periodThis week we are anticipating the price to range in a downtrend channel.
If the price breaks the channel (upward), then the immediate target is at $1600 level.
However, if the price continues ranging in the channel; let it springs up to $1540 area, then we can short it (Higher probability it will break the support level).
For now, just wait and see.
PS: If you are still holding your BUY/LONG position from last week, close it manually at $1545.
ANALYSIS OF US SOYBEANSBearish clues: LONG-TERM
- In weekly time unit, declining buying volumes during the uptrend initiated in July 2020
- Price has reached an important resistance zone around 1,530 cents per bushel ($15.30/bu, with 1 bushel of soybeans equal to almost 27 kg ).
- End of the uptrend and RSI < 50
- Fundamental analysis: increase in planted areas and yield in the United States of America => increase in the US production and stocks + increase in Chinese imports + increase in demand from crushers + increase in next campaign production in Argentina and Brasil
=> Possible reversal in US soybean prices
Bullish clues: SHORT-TERM
- Price rebound on the 200 exponential moving average
- Double hidden bullish divergences on the Relative Strength Index ( RSI ) initiated in April 2021
- Price closes outside Bollinger Bands + RSI oversold (< 30)
- Fundamental analysis: decrease in US exports and the US stock is still at a low level, even if it increases
The price of US soybeans could form a Head and Shoulders chartist pattern. If the price respects this chartist pattern, it could break the neckline and a daily bullish slanted support at the same time (coincidence of these two elements) and reach the level of 1,370 cents per bushel ($13.70/bu).
Feel free to share, comment and give your opinion if it is constructive ;)
DISCLAIMER: This is not investment advice
