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Downward Soybean Price Movement Sharpens

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Trend in soybean price

Soybean futures prices were trading higher than the key support level of 860 cents per bushel on December 16, 2015. Soybean prices breached the crucial support level of 870 and 865 cents per bushel on the day. Soybean prices continue to trade below the key moving averages on December 16, 2015.

The chart indicates that soybean prices could sharpen their downward price movement and remain in the range of 850 and 870 cents per bushel in the near term.

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Price drivers

The weak Brazilian real and the Argentinian peso could boost soybean supplies from these countries, as exporters gain from weak currencies. This would have a negative impact on US soybean in the stronger dollar environment. The US dollar appreciated on December 16, 2015, by 0.20%, which kept soybean export sentiment low and kept soybean futures prices down.

In contrast, drier conditions in the major Brazilian soybean-producing state Mato Grosso hurt Brazilian soybean production sentiment. This supported US soybean export sentiment on December 16, 2015.

Stock review

The second consecutive day of decline in soybean prices negatively affected fertilizer businesses. Fertilizer companies such as Martin Midstream Partners (MMLP) fell by 0.36% on December 16, 2015, continuing the decreasing price movement. On the other hand, CF Industries Holdings (CF), CVR Partners (UAN), and Enterprise Products Partners (EPD) rose 3.4%, 2.6%, and 6.0%, respectively, in the previous two days. Shares of these companies rose by 1.6%, 0.53%, and 4.7% on December 16, respectively. The Material Select Sector SPDR ETF (XLB) advanced by 1.0% on the consecutive second trading day, registering a rise of 1.6% in this period.

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