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Soybean Prices Might Test the Key Support

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Trend in soybean prices

March soybean contracts on the Chicago Board of Trade were trading near the crucial support of $8.75 per bushel on January 26, 2016. Prices fell on the day and lost the key support level of $8.80 per bushel. The volume and open interest fell by 15.9% and 0.73% on January 26, 2016. Prices are in an upward channel. They could remain in the channel. Prices could test the key support in the near term. Prices continued to trade above the 20-day and 50-day moving averages of $8.70 and $8.74 per bushel on January 26.

The above chart suggests that prices could be $8.70–$8.90 per bushel in the short term.

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Price drivers

Mato Grosso’s Institute of Agriculture Economics released the third weaker-than-anticipated soybean crop assessment. It supported US soybean prices on January 26, 2016. DuPont’s report on weaker planting and yield for soybeans on January 26, 2016, supported soybean prices. The US dollar depreciated by 0.26% on January 26. It supported the US soybean export sentiment. Despite strong price supporting cues, soybean prices declined on the day.

Stocks review

Fertilizer companies would benefit from rising soybean prices. It supports farm incomes that are positively related to fertilizer sales. Despite the decline in soybean prices on January 26, 2016, companies like CVR Partners (UAN), CF Industries Holdings (CF), and Martin Midstream Partners (MMLP) rose. CF Industries Holdings recovered by 3.1% after falling by 5.5% for two consecutive days. Martin Midstream Partners rose by 4.0% and continued the rising price movement. CVR Partners rose by 4.5%. In contrast, Chemical & Mining Co. of Chile (SQM) fell by 0.33% for the second consecutive trading day. It fell by 7.5% during the period. The Material Select Sector SPDR Fund (XLB) continued the rising movement on January 26. It rose by 1.7%.

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