Soybean Prices Continue to Rise on the Upward Channel
Why Did Favorable Export Inspections Boost Grain Prices?
Trend in soybean prices
The sharp increase in soybean prices lifted the prices on the upward channel. The prices continued to rise by over 0.3% for the fourth consecutive trading day on March 7. The prices were trading near the support of $8.75 per bushel on the day. The volume fell by 78.9%. For the previous day, the open interest fell by 51.3% on March 7. Prices breached the resistance of the 50-day moving average after nine trading days. The prices increased the near-term projections.
The above chart shows that prices could be $8.70–$8.80 per bushel in the short term.
Price drivers
The weekly soybean export inspections increased near analysts’ top estimate. It supported the soybean demand consensus on March 7, 2016. It received support from the depreciation of the US dollar by 0.11% on the day.
In contrast, the Brazilian real fell against the US dollar. It hurt US soybean export prospects on March 7. A Data Transmission Network report suggested that Brazil’s soybean harvests rose rapidly. This is expected to continue. It hurt the US soybean export prospects on the day.
Stocks review
Rising soybean prices support producers’ income. They will likely use the income for fertilizers. Companies like CF Industries Holdings (CF) and Agrium (AGU) recovered from the fall the previous day. They rose by 6.6% and ~2% on March 7, 2016. Monsanto (MON) rose for the second consecutive trading day. It rose by 2.9% on March 7, 2016. It rose more than 4.1% during the period. CVR Partners (UAN) fell by 0.28% on March 7, 2016. It lost the benefit of the 3.5% rise the previous day. The Material Select Sector SPDR Fund (XLB) rose for the third consecutive trading day. It rose by 1.2% on the day. During the period, XLB rose by 2.95%.
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