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A second bounce for soybeans?

Updated: 12/04/2012 @ 1:34pm

The soybean market had a nice rally from October 16 through October 24. The cash price failed to reach the dollar a bushel rally off the low that was my target for selling cash beans. From October 24 through November 16, cash beans lost all that they had gained and then some. A new low appeared on the charts at $13.50.

Some market watchers asked if it was possible to have a second dead cat bounce yet this year. My answer was that it was theoretically possible but highly unlikely. In all the years I have been using this strategy, I have never seen two complete bounces in the same season. One of the things I have learned from experience is to never say never.

The price improvement that began with the low on November 16 has exceeded the minimum rally of 35 cents. It also has bettered the second goal of 50 cents. All that remains is for the rally to continue until next Tuesday to complete the time requirement of 10 trading days higher than the second harvest low. With the price of $14.06 on the close Friday, the probability is good that all criteria will be met for a second dead cat bounce next week.

There is a lot of good fundamental information in the Marketing section of Agriculture.com. A lot of it is contradictory as markets try to sort out whether the bulls or bears will win the tug of war for the short crop of beans still owned by farmers.

In my opinion, there is still about a month of volatility before traders take the Southern Hemisphere crop for granted. There is time for prices to test both the high and low sides of the trading range. There will probably be a lot of excitement before the harvest south of the border takes the spotlight way from the 2012 crop in this country.

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