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Soybean bears eye price downswing

10/16/2013 @ 7:56am

November CBOT soybeans closed with modest losses Tuesday. The market came under pressure amid the ongoing U.S. harvest, which is allowing supplies to move into marketing channels. Also, news that Brazilian soybean planting is being aided by favorable weather conditions weighed on prices. Brazil is the world's largest exporter of soybeans.

On the daily chart, November soybeans posted a consolidative "inside day," in which the high and low remained within Monday's range. The market is within striking distance of important nearby support in the $12.63 1/2-$12.61 3/4 zone. The bears will be eyeing that floor. If a strong downside breakout were to occur, it would unleash a fresh selling wave and a new downswing in the bearish action, which has been unfolding since the late August peak.

Since late August, a clear series of lower daily lows and lower daily highs is seen. If the $12.63-$12.61 zone were to give way, it would open the door to the next leg down.

However, there is a vacuum of strong or significant chart support below that area. There is a Fibonacci retracement drawn off the early August rally from $11.62 1/2 to the late August peak at $14.09 1/2 that shows a 61.8% retracement at the $12.56 zone. But, beyond that, the market's quick and strong rally move up in the first half of August left little support on the daily chart.

The market is under all significant moving averages from the 20-day to the 200-day, which is a negative position and should keep trend followers bearish.

There is minor support at the lower daily Bollinger band line at $12.51. But, if the $12.56 zone gives way, Nov soybeans will be vulnerable to a 100% retracement of the August rally, which would have the bears eyeing the August low at $11.62 1/2.

On the upside, the contract would need to rally above resistance at $13.05 3/4 to break the prevailing bearish trend pattern.

$14.09 3/4 -- the contract high 
   $12.82 1/4 -- the 10-day moving average 
   $12.97 3/4 -- the 20-day moving average 
   $13.25 3/4 -- the 40-day moving average 
   $ 9.22 1/2 -- the contract low 
DECEMBER SOYBEAN MEAL -- combined pit and electronic trading.

December CBOT soymeal pushed lower Tuesday. In the news, the National Oilseeds Production Association reported the September soybean crush at 108.68 million bushels, which is slightly below month-ago levels at 110.5 million.

On the daily chart, December soymeal futures are failing from recent resistance at the $423.30 zone. The bears are targeting a test of important nearby support at $397.80, the Oct. 1 low. If that floor were to give way, it would unleash a fresh selling wave. The 100-day moving average at $393.80 will act as a target for the bears and possible support.

$451.20 -- the contract high 
   $411.50 -- the 10-day moving average 
   $412.70 -- the 20-day moving average 
   $419.50 -- the 40-day moving average 
   $234.00 -- the contract low 
DECEMBER SOYBEAN OIL -- combined pit and electronic trading.

December CBOT soybean oil edged to a higher close Tuesday. NOPA reported that soyoil stocks stood at 1.372 billion pounds in September, which is below month-ago figures at 1.688 billion. On the daily chart, the market remains in the midst of a minor corrective rally move. The longer-term trend is solidly bearish, but a minor bottom formed at 39.20 hit on Oct. 2. On the upside, resistance remains at 41.34. The bulls need to conquer that ceiling to extend the current corrective rally move higher. On the downside, very-short-term support lies at 40.10.

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