Soybean price is range-bound after several weeks of gains. The supply/demand outlook remains bullish as record US diesel prices and Chinese demand offers steady support. Investors are now eyeing the US crop progress for further cues on the supply dynamics. Besides, the US-Iran peace talks and President Xi’s state visit to the US are also set to influence the market sentiment.
Soybean market remains choppy as investors weigh key drivers
Soybean price remains range-bound as it finds support along a months-long bullish trendline. Investors are tracking the US crop progress for cues on the supply outlook.
In the crop progress report published at the start of the week, NASS indicated that 62% of the US soybean crop was dropping leaves as of late last week. Notably, dropping leaves in soybeans is a natural sign of harvest readiness. Harvest was placed at 12% complete while the condition ratings held steady at 58% for good/excellent.
Besides, the Weekly Exports Inspection report for the week ending on 17th September listed soybean shipments at 759,193 metric tonnes. The figure was 11.6% higher than the previous week and an increase of 34.2% from a similar period last year. Soybean shipments are also 1.8% higher YoY, with China being the leading destination.
At the same time, uncertainties on the geopolitical front have contributed to soybean’s choppy market. As a key source of biofuel, soybean demand has been moving in tandem with crude oil prices. On the one hand, persistent disruptions along the all-important Strait of Hormuz have increased oil prices.
While the benchmark Brent oil prices have been on a decline in recent sessions, diesel prices in the US hit a record high of $6.50 a gallon at the start of the week. In comparison, the fuel price was at $3.70 a year ago.
The soaring diesel prices have bolstered the demand for soybean meant for oil crushing, even as the market eyes the US-Iran peace talks later at the UN. Besides, earlier in the month, the US Environmental Protection Agency announced the reallocation of the excess volumes following the small refinery exemptions.
Soybean price technical analysis
Soybeans price chart | Source: TradingView
CBOT soybean futures edged lower on Wednesday, holding the losses recorded in the previous session. The market has been rather choppy in recent sessions, even as the months-long trendline continues to offer support to the agricultural commodity. At the time of writing, soybean price was trading at $13.18 per bushel; down by 0.51%.
Even with the recent losses, it is on track to record its second consecutive week in green. Notably, it has had weekly gains for five out of the past six weeks.
A look at its daily trading chart points to continued range-bound trading in the near term. On the one hand, soybean price has been trading above the short-term 25-day EMA and the medium-term 50-day EMA. Indeed, the bullish golden cross pattern has been in place since mid-July. Besides, the months-long trendline is set to continue offering steady support to the asset in the short term.
Nonetheless, the buyers lack enough momentum to retest and break-out of the resistance along the three-year high hit two weeks ago. Besides, at an RSI of 59, it may hover near the neutral zone as investors weigh the crop progress and demand outlook.
In line with both the fundamentals and the technical indicators, the range between the resistance at $13.35 and the support at $12.96 is worth watching. A further pullback may have the bears eye the lower level of $12.80 as the bulls strive for a rebound above the crucial trendline. On the upside, the entry of more buyers would help break the strong resistance at $13.35 with the next target being at a fresh three-year high of $13.45.
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