Soybeans, an important crop to China and American farmers. However, due to the trade war that's heating up between China and the US, China announced plans to impose 25% tariff on soybeans and other farm goods. Soybean futures on the Chicago Board of Trade sank 14% along in June. China is the world’s largest soybean consumer. Soybeans are the top agricultural commodity the China imports from the U.S. Soybeans account for about 60% of the U.S.’s $20 billion of agricultural exports to China. Something has to give…will it be China or the US farmers…lets go to the charts for clues.
Monthly Chart (Curve Timeframe) – Price dropped from monthly supply at $1067/bushel. Price is on the verge of breaching the nearest monthly demand at $860/bushel now. I expect a bounce out of this monthly demand zone, but I personally like the lower monthly demand zone at $740/bushel. I have no idea if price will get that low. If the US and China play the game of who has the bigger gun, it possible price will go that low.
Weekly Chart (Trend Timeframe) – price just broke the up trend in recent weeks.
Daily Chart (Entry) – if the monthly zone at $860/bushel has any chance of holding, price must close above $904/bushel. If price can close above that level, the 1st target becomes $950 where there are sellers just right above that level.
However, based on the seasonality of Soybeans, I don’t expect the monthly zone at $860/bushel level to hold, especially if the trade wars continue into the Fall.
Look for price to breach the monthly demand zone at $860/bushel and head down to the next monthly demand zone at $760/bushel. There is a lovely entry point at $740/bushel, which I think will be a screaming buy as price hasn’t seen these levels since 2007. That’s also the origin of the strong move that took price from $740/bushel to $1650/bushel.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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by rollandthomas