Soybean Spreads Continue Holding the Line for Bulls

Strategy of the Day 11.13.2019

Soybean Spreads Hold the Line for Bulls

From a technical perspective, January Soybean Futures (chart below) have traded down into what could be a major inflection zone between 920 and 912. This area of support is created by the 50% Fibonacci retracement (at 912), as well as the prior highs the market broke out from in September (and early October) at 917. The last several days of selling pressure in the outright futures, has also come at the end of life for the November contract. This suggests that, so long as cash prices remained somewhat stable over the same period, that this dip in price may have bene the result of commercial rolling of short interests into the January contract; and seen as price convergence in the futures towards cash. This idea is supported by the fact that key calendar spreads in the Soybean complex, have not seen the same follow through to new November lows (as were seen in January beans yet again today!).

Below I have included a 240 min chart of the Jul-Nov 2020 soybean futures spread, with the underlying front month future overlaid. I have also included a few technical indicators, including the volume profiles for the life of the contract (on far right) as well as monthly profiles overlaid. What is important to take away...

Dan's full Strategy of the Day is available for PDF download: