Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

Soybeans Could Plunge To Under $12 After 'Nail-In-Coffin' Report By USDA

By Barani Krishnan/Investing.comCommoditiesOct 07, 2022 05:03AM ET
www.investing.com/analysis/soybeans-could-plunge-to-under-12-after-nailincoffin-report-by-usda-200630774
Soybeans Could Plunge To Under $12 After 'Nail-In-Coffin' Report By USDA
By Barani Krishnan/Investing.com   |  Oct 07, 2022 05:03AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
ZS
+0.05%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
-0.04%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • After woeful summer, grim times haven't ended for soybean longs
  • Super-bearish crop report at end of September may seal market's doom
  • USDA projects soybean inventory of 274 million bushels 
  • Market could drop to $11.70, charts show; flip side rebound could hit $14.77

Soybean bulls have few places to hide.

After a woeful summer, grim times haven’t ended for longs in the trade, with October shaping to be their fifth straight month in the red.

Reason: A super-bearish crop report for the end of September by the US Department of Agriculture (USDA) which, traders say, might have put the proverbial nail into the coffin of the market.

Soybean futures on the Chicago Board of Trade fell its most in 1½ months, losing 3.3% after the report surfaced on Sept. 30. 

Soybeans Daily
Soybeans Daily

Charts by SKCharting.com, with data powered by Investing.com

The USDA projected a soybean inventory of 274 million bushels versus a trade forecast of 242 million bushels. That compared with the 971 million bushels seen on June 1 and 257 million bushels on Sept. 1, 2021.

As AgWeb noted in its roundup of the USDA report, the narrative prior to the report was an obvious shortage of soybeans. However, the report showed more soybeans than the trade expected.

As a result, soybeans posted their biggest loss since a 4.3% drop on  Aug. 1, Jerry Gulke, president at grains trading house Gulke Group, said in the AgWeb roundup. He adds:

"What changed? We increased the stocks, which will increase the carry-in for next year. Those extra bushels get us [into] a problem area, when we are still trying to figure out how much demand destruction has occurred."

Last Friday's close of $13.64 per bushel for soybeans, Gulke says, put the nail in the coffin basically for the soybean price outlook.

"The good news is we're still trading over $13 on beans out of the field," he says.

"Even for 2023, there are over $13. I think the market still has some kind of a weather premium built in on a potential crop problem in Brazil again or what if we can’t grow enough soybeans in the US again?"

Jack Scoville, chief crop analyst at Chicago brokerage PRICE Futures Group, also suggested international problems may be weighing on soybeans beyond the US crop.

"Brazil is still offering beans and South America as a whole is expected to produce a very big crop later this year for harvest next spring," Scoville said, adding that the La Niña weather phenomenon could cut some production potential.

"US production ideas remain strong after mostly good weather in August and September. Harvest weather is cool and clear for most of the Midwest at this time. Basis levels are still strong in the Midwest. There are still renewed Chinese lockdowns and there are fears that China has been importing less as a result."

The situation in soybeans now could not be more at stark to where the trade stood eight months ago.

Back in early February, soybeans had rallied in 12 out of 16 weeks as crude oil hit 8-year highs of $90 a barrel and most commodities surged as well from Russia’s invasion of Ukraine. Inflation was, meanwhile, raging at 40-year highs.

The current situation prompts Gulke to question what would get soybeans back to its February peak of $17.59. 

"The problem is now we’re in a position where we need to have a problem somewhere to see the light of day of $15 to $17 in beans again," he adds.

Soybeans Weekly
Soybeans Weekly

For now, soybean futures remain in the vice grip of bears and could even drop to under $12, said Sunil Kumar Dixit, chief technical strategist at SKCharting.com.

"The price outlook remains bearish," said Dixit.

He said the Relative Strength Index, Stochastics and Moving Average Convergence Divergence across the daily, weekly and monthly time frames all indicated negativity.

The 5-month Exponential Moving Average of $1.425 crossing below the monthly middle Bollinger Band of $14.43 was in itself a bearish affirmation, he said.

The daily chart shows multiple rejections at the 38.2% Fibonacci retracement of the $17.84 - $12.88 drop.

Prices have also breached channel support and dropped after a retest, Dixit added.

Soybeans Monthly
Soybeans Monthly

"As long as $14.05 is resistance, downside prevails for a retest of the swing low to $13.14, which is the acceleration point for a further drop to $12.50 and $11.70."

On the flip side, a sustained break above $14.05 will open the way for recovery towards $14.77, Dixit added.

Disclaimer: Barani Krishnan uses a range of views outside his own to bring diversity to his analysis of any market. For neutrality, he sometimes presents contrarian views and market variables. He does not hold a position in the commodities and securities he writes about.

Soybeans Could Plunge To Under $12 After 'Nail-In-Coffin' Report By USDA
 

Related Articles

Tim Knight
Gold Approaching Target By Tim Knight - Dec 01, 2022

Precious metals reached escape velocity, fuelled by the crumbling U.S. dollar. The arrow below marks, in my opinion, the highest target for SPDR® Gold Shares (NYSE:GLD) right...

Soybeans Could Plunge To Under $12 After 'Nail-In-Coffin' Report By USDA

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Stephen Fa
Stephen Fa Oct 07, 2022 8:08AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Biden sends billions of US tax dollars of weapons to Ukraine while many thousand Somalians starve. The Somalians could use the extra soybeans.
Mahmoud Reda
Mahmoud Reda Oct 07, 2022 7:57AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Is this late report ?? Soya bean already plunged  , are we expecting today 1400++ :)
SunilKumar Dixit
SunilKumarDixit Oct 07, 2022 7:57AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Mahmoud Reda. The Market for Soybeans was closed at the time of writing.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email