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Back to seasonal trends

Agriculture.com Staff 07/25/2008 @ 12:56pm

A look at the long term seasonal trend chart of soybean futures shows the coming week to be pivotal in the market. It is normal to have soybean futures become over sold during the month of July. That is followed by a recovery going into the September crop report. Rather than a sharp reversal, however, the charts show a period of almost flat prices the first two weeks of August. .

Around the middle of August the odds for a price recovery become much better. The psychology of the market that causes this rebound is a fear that crop conditions might not be as good as the recent price drop would indicate. This accompanies the thinking that prices have dropped too far too fast. With soybean futures down two dollars and a half in a month, a rebound would not be out of line.

The long term chart shows that the average retracement in the last 28 years was 14 cents. That does not seem like much of a move. However, the average drop from the weather rally highs in late June is only 28 cents. That means that the rebound is almost exactly half of the price drop. If we would get that kind of move this year, it would be over a dollar a bushel. When looking at the 28 year long term charts, it is important to consider that it includes some years when the price was under $5.

It is always possible that prices could drop more before the retracement begins. That makes anticipating a rally very difficult. However, when it does begin, it is easy to set price targets. You just need to be determined to not miss the opportunity this time.

Crops here in Cass County, Nebraska look very good. We keep getting small rains without having any gully washers in the past two weeks. Corn on the river bottom looks much better. What survived the flood was very short and yellow a month ago. The hot days of the last week were just what the doctor ordered. The conditions for that corn have improved dramatically.

Soybeans are doing well also. Many were planted late. Those are short but growing fast. My big concern is that the heat and humidity are ideal environment for Soybean Rust. Prior years after this disease came to the United States, hot and dry weather in August prevented it from doing much damage. Conditions this year will be the true test of whether it is going to be a perennial problem or not

This week, I got the price data to update my long term seasonal charts. I hope to have them finished and on my website in a week.

A look at the long term seasonal trend chart of soybean futures shows the coming week to be pivotal in the market. It is normal to have soybean futures become over sold during the month of July. That is followed by a recovery going into the September crop report. Rather than a sharp reversal, however, the charts show a period of almost flat prices the first two weeks of August. .

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