Soybean Prices Rose above the Key Moving Averages



Trend in soybean prices

Soybean futures contracts, for March expiry, were trading near the crucial support level of $8.85 per bushel on January 19, 2016. Prices continued the upward movement. They fell the day before. With the price rise, soybeans were trading above the key 20-day, 50-day, and 100-day moving averages on January 19, 2016. The volume and open interest for the contract fell for the second and third consecutive trading days by 5.7% and 1.8% on January 19, 2016.

The above chart suggests that prices could be $8.75–$8.90 per bushel in the near term.

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Price drivers

The weather forecast isn’t favorable for Brazilian soybeans for the week ending on January 23, 2016. This supported US soybean futures prices due to cues of lower export competition.

January survey results from Informa Economics show that the US soybean plantings will be higher in 2016. The speculation of higher supply kept prices under pressure. The US dollar appreciated by 0.05% on January 19, 2016. It had a negative impact on the export sentiment. The US dollar isn’t favorable for the export market.

Stocks review

Rising soybean prices support fertilizer sales by supporting farm incomes. Fertilizer companies including CF Industries Holding (CF), and Enterprise Products Partners (EPD) fell by 4.2% and 5.6% on January 19, 2016, for the second consecutive trading day. They fell by 7.3% and 7.9% during this period. CVR Partners (UAN) fell by 5.5% for the sixth consecutive trading day on January 19, 2016. The stock fell by more than 22.6% during this period. Chemical & Mining Co. of Chile (SQM) rose by 0.55% for the third consecutive day on January 19, 2016. The Material Select Sector SPDR Fund (XLB) fell by 1.2% on January 19, 2016, for the second consecutive trading day.


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