Soybean Rally Losing Momentum?

February 27, 2018 10:25AM CST

You know what they say about a bull market. A bull market needs to be fed a steady diet of “bullish” news. At this point and time Argentina continues to suffer from drought conditions and production will be negatively affected with losses of potentially 10 million tons off the USDA’s February forecast of 54 million tons. One forecaster is saying Argentina’s production could be as low as 40 million tons. So, two points that I want to stress here. Firstly, the worst case scenario is already priced in. Markets almost always over react. Secondly, forecasters always exaggerate the extent of the crop damage. Rain will come, and all will be well again.

I’m a chart guy. It’s usually a level on the chart that turns a market around or at least causes a market to lose its momentum. Yesterday’s trading action in the soybeans indicates a reversal. Today we need to see a confirmation of that reversal. Also keep in mind that if you’re a producer, you should be happy to sell your beans at $10.20 and higher. These are good levels for farmers to hedge their crop. On top of all that, you should expect more soybean acres this spring. There will not be a shortage of beans in my opinion.

Soybeans May '18 Daily Chart


RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.