June 11, 2009

Chicago Board of Trade soy futures opened modestly higher in the wake of a bullish, but not surprising, US Department of Agriculture supply and demand report issued Wednesday (June 10). However, prices then backed off to trade below unchanged as a "buy-the-rumour, sell-the-fact" scenario played out.

July soy futures on Wednesday morning did hit a fresh 8 1/2-month high of US$12.54 a bushel. July beans are still in a strong 6-week-old uptrend on the daily bar chart.

The next upside price objective for the soy bulls is to push and close July futures prices above major psychological resistance at US$13.00, which would put "beans in the teens."

Psychological support for July soy is located at US$12.00 a bushel. A close below the last "reaction low" on the daily bar chart, located at last week's low of US$11.77, would at least temporarily stall the uptrend in prices and would provide the bears with some fresh technical momentum.

Importantly, soy traders will continue to monitor the value of the US dollar and crude oil prices for price direction. Any profit-taking selling pressure in crude oil or solid rebound in the value of the US dollar would quickly dent bullish enthusiasm in the soy complex.

Also, grain traders should be aware that the first trading day after the US Independence Day holiday is historically a very important trading day in the grain futures markets. History shows that price trends in the grain markets can either accelerate or reverse on that first trading day after the Fourth of July holiday. This year, that day falls on Monday, July 6.