“Picking tops is a fool’s game”! I know it sounds crazy to some, but here is how I see things today. The soybean market has lost momentum. The market also has not, with all this bullish news of Chinese demand, tightening stocks and drought conditions in Brazil, been able to trade and close above the key level of $12.00. Yesterday was a “outside down day” in soybeans. A key reversal indicator. We now are getting a shift in weather pattern in Brazil. “Rain makes grain”. China not only has slowed down purchases but there is likely to be several cargoes getting canceled. China is notorious for using this tactic. Let’s face it folks, the new administration in Washington is going to re-work trade deals that will benefit China.

So, the way I see it is that we have a market that was way overbought and in need of some correction. There’s been some damage now to the chart and technical trading is how most traders trade. That’s what is happening right now. Fundamentals are slower to change. They take time to shift but I believe that drought busting rains in Brazil will take $1.00 to $1.50 out of this premium immediately. And honestly, who doesn’t think it’s likely that China plays games with soy prices?

We will likely see some consolidation around $11.50 to $11.40 range. People will talk about a “head and shoulders” pattern. Another trend reversal indicator.

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