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Soybean market-top not in, CBOT traders say

Agriculture.com Staff 02/06/2016 @ 9:55pm

CHICAGO, Illinois (Agriculture Online)--The big question floating around the market discussion groups and the Chicago Board of Trade is whether the soybean prices have topped.

For instance, on Friday the Jan '08 soybean futures contract reached a 19-year high. On Monday, the lower crude oil prices led the soybean complex into choppy trading for most of the day session. But, a friendly purchase by a large investment firm and a supportive crude oil market helped the nearby Jan '08 soybean contract finish 4 cents higher at $11.28 3/4.

So, has the soybean market topped?

Despite a seasonal tendency for soybeans to work their way lower between Thanksgiving and the end of the year, the general consensus is the top is not in.

In the Agriculture Online Marketing Talk section, 'patriot' recently posted a bullish comment about the soybean prices. "I'm not a techie, but the fundamentals look great. Did you see the export numbers again today? South America not off to a great start, lots of N being applied out West, pipeline numbers for '08 carryout all add up for a nice bull run. I look for a chance to see the all-time highs ($12.99 ) challenged if we get in an all-out acreage war started. Lots of more reason for upside than downside right now." "A test of all-time highs in the making if we can close above 11 dollars," 'farmpro10' posted.

Traders on the floor of the Chicago Board of Trade agree the market-top may not be in for soybeans.

I don't think we can say the top is in," Vic Lespinasse, Illinois, Grain Co. floor trader, says. We started the Monday trading higher before breaking. A lot depends on what the energy market does. If crude sells off, it will be difficult to rally the beans much further, as well as the corn or soybean oil."

Crude oil, down $1.50 per barrel in early trading Monday, is applying pressure to soybeans and soybean oil.

Another big factor is China as last week they were huge buyers of U.S. soybeans and soyoil. "If they keep buying, that would be supportive for the bean complex," Lespinasse says.

In the background, the acreage allocation for next spring is playing as a fundamental. "That's a long way off. We can't think or say too much about that," Lespinasse says.

Joe Bedore, FC Stone's floor manager at the CBOT, disagrees that this week could be the last hurrah for the soybean market.

"I don't believe the top is in because before the year is out we are going to stress dryness in Argentina and southern Brazil," Bedore says.

Bedore adds, "Even though you say well, Argentina's a smaller soybean producer than Brazil, when you are in an acreage crunch, you can't afford a bump in production."

In addition, Bedore says the soybean market has technical support.

"Last week, our charting on July soybeans didn't reach our goal of an $11.25 close or above. If we would have hit that mark, we thought we could reach all-time contract highs. The contract hit $11.24 3/4. This just means we have more work to do. But, I don't think the upside is over."

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