Soybean Market Set Up for Potentially Volatile Action Next Week, Says Analyst
Soybeans ended the week on a bullish note as they traded at price levels not seen since August 10. For the week, the November contract gained 15½. It was estimated that the funds were long 6,000 bean contracts coming into today. With the market taking out the double-top resistance at 9.78 and 200-day MA at 978½, they no doubt fueled today’s move higher as they added to their length. Adding to the bullish enthusiasm was another export sales announcement of 190,000 tonnes of beans sold to Mexico this morning. This was the fourth day in the last five that we saw a flash sales announcement showing that we are trading at levels importers view as value.
The heat that the Midwest is currently experiencing is drying down the crop fast and should allow for the trade to get a better handle of the size of the crop sooner than originally thought. This might have forced some market bears to the sidelines. The trade has constantly disagreed with the government thoughts on the size of the crop. If we come in next week and actual yield results are worse than thought, it could ignite another round of buying. This sets the market up for some potentially volatile action next week.
Today’s trade action took out the double top, which now projects the market to test the $10.15 price level. The long-term downtrend line off the summer highs provided resistance at the 9.87¼ level today. If we gap above this point Sunday night, we could be off to the races. On the other hand, if the yields are better than anticipated and the market falls back below the double top at 9.78, today’s move higher will look like a bull trap. Needless to say, next week’s trade could set the tone for the next few weeks.
This material has been prepared by a sales or trading employee or agent of Allendale Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Allendale’s Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.
DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.
The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Allendale Inc. believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.