Trend in soybean prices
March soybean futures contracts were trading near the crucial support level of $8.75 per bushel on January 22, 2016. Prices continued the downward movement with the fall on January 22. The volume of the contract fell by 29.8%. The open interest rose by 0.31% on the day. Prices continued to remain above the 20-day and 50-day moving averages of $8.70 and $8.73 per bushel on January 22. Prices are expected to continue on the downward channel.
The above chart suggests that prices could be $8.85–$8.65 per bushel in the short run.
The U.S. Department of Agriculture’s weekly soybean export sales were negative compared to the previous week. They crushed the market expectations on January 22, 2016, and kept soybean prices down. The US dollar rose by 0.44% on January 22. It had a negative impact on the exports. The higher US dollar isn’t favorable for the export market.
Due to an unexpected decision from Argentina’s farmers about the devaluation of the peso, the inventory build didn’t provide a hedge against the possible currency fluctuation. More hoarding in the soybean supply decision supported US soybean exports.
The fall in soybean prices is negative for fertilizer businesses’ shares. It would directly reduce the farm incomes that have a positive correlation with fertilizer sales. CF Industries Holdings (CF) continued the downward price movement. It fell by 1.02%. It was hindered by the rise on January 22, 2016. Martin Midstream Partners (MMLP) and CVR Partners (UAN) rose by 6.5% and 8.8% for the second consecutive trading day on January 22, 2016. Prices rose by 18.1% and 11.7% during the previous two days, respectively. Chemical & Mining Co. of Chile (SQM) rose by 6.2% on January 22, 2016, after falling by 6.5% for two consecutive days. The Material Select Sector SPDR Fund (XLB) rose by 1.8% for the second trading day. It rose by 3.9%.