Soybean Prices Continued on a Sharp Downward Channel
Why Did Weekly Export Sales Influence Grain Prices?
Trend in soybean prices
March 2016 soybean futures prices on the Chicago Board of Trade were near the support level of $8.60 per bushel on February 25, 2016. Since December 2015, the prices reached this level four times. The prices continued to fall sharply on the day. The volume fell by 3.2%. The open interest fell by 30.1% on February 25. Prices continued to trade below the key simple moving averages on February 25 for the third consecutive day.
The above chart suggests that prices could be $8.55–$8.70 per bushel in the short term.
Price drivers
The Weekly Export Sales report from the U.S. Department of Agriculture for soybeans was bearish compared to the expectations. It had a negative impact on soybean prices on February 25. For five years, the average progress of the Brazilian soybean harvest supported the pace of the soybeans to the ports. It limited the sentiments of switching soybean demand to the US. It hurt export prospects for US soybeans.
The International Grains Council’s lower global soybean production—compared to the previous year—supported the sentiments of restricted supply on February 25, 2016. The US dollar depreciated by 0.05% on February 25. It supported soybean export sentiments. The lower US dollar is favorable for exports.
Stocks review
The fall in soybean prices hurt the shares of fertilizer businesses. It hurt the farm incomes. On February 25, 2016, Enterprise Products Partners (EPD) fell by 0.95%. It continued the share’s downward movement. It was hindered by the fall the previous day. The shares of Syngenta (SYT) and Martin Midstream Partners (MMLP) rose by 0.5% and 1.4%, after falling for five and two days by 1.9% and 8.3%. Agrium (AGU) rose for the second consecutive trading day due to the decline in soybean prices on February 25, 2016. It rose by 2.9% during the period. The Material Select Sector SPDR Fund (XLB) rose by 1.2% for the second consecutive trading day. It rose by 2.3% during the period.
Browse this series on Market Realist:
