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This is a follow up article to: Soybean and corn prices rise on strong demand signals and crop tour insights
The agricultural commodities market has been facing quite a bit of pressure, with soybean and corn hitting their respective lows.
Picture: Soybeans declined with a bumper in harvest, as observed on the VT Markets app.
The Soybean-C (Soybean Futures) chart shows a clear downtrend, with the price currently at $9.731 after a brief recovery. The recent declines in soybean prices are largely driven by forecasts of bumper harvests in key U.S. growing areas, as revealed by a closely monitored crop tour.
These expectations of an abundant supply have put downward pressure on prices, as the market anticipates an increase in available soybeans.
Technically, the chart reflects the ongoing bearish sentiment, with the price trading below key Exponential Moving Averages (EMAs), particularly the 72-period EMA, which is acting as a resistance level. The MACD indicator also supports the bearish outlook, with the MACD line below the signal line and the histogram showing continued negative momentum, indicating that the downward trend may persist.
Traders should watch the support level around $9.618, as a break below this level could signal further declines. On the upside, resistance near $9.750 could limit any short-term rebounds.
The recent U.S. crop tour provided a clearer picture of the potential yield, estimating record corn yields in top-producing states like Iowa and Illinois. This forecast bolstered the bearish sentiment in the market, with Pro Farmer projecting a soybean harvest of 4.740 billion bushels, surpassing the U.S. Department of Agriculture’s (USDA) forecast of 4.589 billion bushels.
The pressure on prices was exacerbated by strong supply-side factors. The Pro Farmer tour highlighted robust yields, particularly in Iowa and Illinois, even though some regions like Minnesota reported disappointing results.
On the demand side, despite strong sales to China and other buyers, the ample supply is driving down prices, with large speculators increasing their net short positions in corn futures.
However, the relatively strong demand for corn and consistent flash sales to China have provided some support to prices, preventing further declines. Farmers are also selling off old-crop corn and soybeans to make room for the upcoming harvest, which is adding to the selling pressure in the market.
The notable drop in soybean and corn prices might present buying opportunities, especially if the market experiences any short-term corrections. Traders should keep a close watch on weather conditions and further updates from crop tours when trading these soft commodities.
Given the current bearish trend, traders may also consider short positions, particularly in corn and soybeans, as the market continues to digest the impact of expected large U.S. harvests.
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