November 13, 2008
Technical Special: CBOT January soy remain in downtrend
January soybean futures at the Chicago Board of Trade are still trading below a four-month-old downtrend line drawn from the July and August highs. The bears do still have the overall near-term technical edge as prices have shed over US$7.00 a bushel from the contract and all-time high of US$16.48 scored on July 3.
It is interesting to note that market history has shown grain futures prices tend to make significant trend changes around the Fourth of July holiday period. That was certainly a case in point this year. And speaking of historical tendencies, "seasonality" studies do show soybean futures prices bottoming out in the October time frame, to produce what is termed a "harvest low," and the prices rally into the end of the year.
January soybean futures are presently trading in the middle of a four-week-old trading range, bound by solid technical and trend-line resistance at the November high of US$9.81 3/4, and by solid technical support at the October low of $8.38 1/2. The direction in which prices "break out" of this trading range is likely to be the next significant near-term price trend in January soy futures.
Soy traders will continue to keep one eye on the key outside markets - crude oil, U.S. stock indexes and the value of the U.S. dollar. These markets have had a major influence in the grain futures markets in recent months. A combination of a weaker dollar and stronger crude oil prices is bullish for soy. A stronger greenback and lower crude oil prices are bearish for beans.