Four months ago, I wrote about Soybean prices moving higher.
Well, price is hugging that trend line like a couple in love and finally breached the upper range at $920. The chart is suggesting price will pull back before moving higher to the daily supply at $957.
However, since that time, Soybean prices are at levels not seen in ten years. In recent months, the African swine fever has wiped out 1 million hogs in China, Europe and Southeast Asia which is going to put a dent in soybean demand as that is a major part of a pig’s diet.
Last week, the CEO of Tyson said, “in my 39 years in the business, I've never seen an event that has the potential to change global protein production and consumption patterns as African swine fever does.” The end result could be the loss of some 150 million to 200 million pigs this year according to some analysis.
Also, despite Trump’s optimism, a trade deal didn’t’ get done, only additional tariffs.
“There’s going to be plenty of soybeans around in the world,” said Jack Scoville, an analyst at brokerage Price Futures Group. “If we don’t get a trade deal, we have a huge issue on our hands. Even if the Chinese come back and buy a lot of soybeans from us, their demand will be less because of African swine fever.”
On Friday, the U.S. Department of Agriculture said domestic soy inventories would be higher than analysts had predicted. The agency pegged 2019-20 inventories at 970 million bushels, the second-highest ever after a record 995 million in the current season.
So where are Soybean prices heading next, lets go to the charts?
Since that time, price breached the up trendline in Feb.
But in May price bounced off a major support/resistance line at $8000.
However, if soybean demand is less than supply over the coming months as anticipated, the chart suggest price, will break the major support/resistance line and head down to the monthly demand at $6700.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.