Soybean futures (symbol: S) are testing critical long-term support at the $13.60/bushel level (Jul14 contract). This support line has its origin back in Sep06 at the $5.4250/bushel level.
Soybeans are experiencing selling pressure related to higher inventory levels and the Acreage report released by the National Agricultural Statistics Service (NASS – a division of the USDA). Quoting … “Soybean planted area for 2014 is estimated at a record high 84.8 million acres, up 11 percent from last year. Area for harvest, at 84.1 million acres, is up 11 percent from 2013 and will be a record high by more than 7.4 million acres, if realized. Record high planted acreage is estimated in Michigan, Minnesota, Nebraska, New York, North Dakota, Ohio, Pennsylvania, South Dakota, and Wisconsin.”.
The following chart reflects soybean futures price dating back 10 years.
Critical support lies at $13.60, $12.55 and the $10.63 levels. While the weekly chart above shows overbought conditions, the daily chart suggests a short term oversold condition. Accordingly, we would expect a bounce from current price levels, followed by more selling pressure.
The Soybean futures forward curve is currently in backwardation, that is the forward prices are trading at lower levels than the prompt month contract, suggesting the markets are expecting softening prices.
Murphy & Co’s Corn model is currently flat, holding no position. To learn more about Murphy & Co’s position models, visit http://murphycofutures.com/position-models/.