LIke many things in life, trading is about timing. The June 30 report from the National Agricultural Statistics Service (NASS), United States Department of Agriculture (USDA) features slightly higher soybean stocks than expected and slightly lower acreage.
Soybeans traded lower early this morning as focus shifted to the favorable U.S weather fueling expectations for big harvests. The market rallied up later today into positive territory. Fundamentals and technicals appear bearish.
Notice the daily chart below and how these levels have held since mid-April.
One trade strategy would be to buy November soybeans at 1027, which is today’s settlement price. Risk the trade to 1011 on a stop, good until cancelled. That’s under the 1011.4 low on May 1. A profit goal can be 1070, which is right under the high of 1074.2 reached on June 20.
In my opinion, if crude oil rallies, that could help soybeans and soybean oil rally. In addition, Italy says they are ready to boost U.S. soy imports to narrow the trade deficit. A favorable trade deal with China will also benefit this soybean trade strategy.
Another factor is the weakening U.S. dollar, which continues to slide following last week’s gap lower. Sooner or later, a devalued dollar will help support U.S. grain exports, in my opinion.
Timing seems good for this strategy with the long July 4 holiday weekend ahead. If the weather changes to hot and dry on Sunday night, the soybean market should trade higher.
