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Strong Resistance Defended the Rise in Soybean Prices

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Trend in soybean prices

Soybean futures prices for January expiry were near the key support level of $8.85 per bushel on December 22, 2015. The correction in soybean prices extended below a strong resistance on the second trading day. It might shift from an “upward” to “downward” price movement. During the last three trading days, the volume of the soybean contract fell by 63.7%. The first notice day for the January contract is just a week away.

According to the indications in the above chart, soybeans could be $8.80–$9.05 per bushel and test the resistance.

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Price drivers

The weather conditions in Brazil show a favorable forecast. This supported the soybean output competition in the exports market. It pushed US soybean futures prices on December 22. Analysts are concerned that amid unfavorable Brazilian weather conditions, Argentina’s soybean exports could rise. This would increase the competition. It kept soybean futures prices under pressure.

The US Dollar Index fell by 0.25% for the second consecutive trading day. It was supported by US corn exports on December 22, 2015.

Stocks review

The fall in soybean prices would bring negative movements for fertilizer companies. Their sales would be negatively impacted due to the fall in farm incomes. In contrast, on December 22, the fall in soybean prices brought favorable price changes for fertilizer businesses. After falling for three consecutive days, CVR Partners (UAN) rose by 3.9% on December 22, 2015. Chemical & Mining Co. of Chile (SQM) and Enterprise Products Partners (EPD) rose by 2.8% and 1.9% on the third day of the price rally. Martin Midstream Partners (MMLP) also rose by 7.90%. It recovered from a 2.2% fall on the previous day. The Material Select Sector SPDR ETF (XLB) rose for the second consecutive trading day by 1.3% on December 22, 2015.

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