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Why Did Soybean Prices Move Downwards?

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Trend in soybean prices

January soybean futures contracts were trading above the key support level of $8.80 per bushel on December 23, 2015. Soybean prices fell for the third consecutive trading day. This resulted in the three black crow price movement on the day. It suggests that prices could correct in a few days with an increase. On December 23, soybean prices continued to trade above the 20-day and 50-day moving averages of $8.81 and $8.79, respectively.

The above graph shows that soybeans would be $8.75–$9.00.

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Price drivers

Despite the unfavorable weather forecast in key Brazilian soybean producing regions, US soybean prices fell on December 23, 2015. The US dollar appreciated by 1.3% on December 23, 2015. This kept soybean prices under pressure. A higher US dollar hurts the prospects of US goods in export markets.

Stocks review

The negative price movement in soybeans attracts unfavorable price movements for fertilizer companies. This impacts producers’ income. On December 23, fertilizer companies rose for the third trading day due to the fall in soybean prices. Enterprise Products Partners (EPD) rose by 3.60% on December 23. It rose by 10.8% in four days. CVR Partners (UAN), Martin Midstream Partners (MMLP), and CF Industries Holdings (CF) rose for the second consecutive day by 6.2%, 3.3%, and 3.4% on December 23, 2015. These shares added 6.9%, 11.4%, and 10.4% in last two days of trading. ETFs like the Material Select Sector SPDR Fund ETF (XLB) rose by 2.4% on December 23. It rose by 4.6% in the last three days.

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