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Soybeans’ Recovery Capped, Sugar Down to 7-Month Lows

Mauricio Carrillo

Soybeans prices are trading down on Friday as investors are digesting trade war events between China and the United States. Also, the sugar surplus is adding pressure to the commodity.

Corn accelerates and reaches near three months highs at 3.742 on Friday. Wheat is extending recovery as it is consolidating gains above 4.600. Sugar breaks below 0.1135 resistance and trades at 7-month lows.

Soybeans resume its decline

Prices for soybeans are down on Friday as the 20-day moving average has contained the oilseed recovery in the last three days and it is now trading around 8.178.

A cocktail of factors is contributing to the decline. First, the trade war between China and the United States are adding pressure on prices as investors are worried about China stopping soybean purchases from the United States.

As reported previously, the market doesn’t see any solution to the trade conflict any time soon.

Second, the 20-day moving average has been acting as a resistance which has contained the seed recovery. 8.355 on May 15, 8.326 on May 16, and 8.296 today Friday, May 17, always the 20-day moving average capping gains.

So, investors finally gave up on the recovery and let the seed go down.

And third, Friday rebalancing and profit taking is also affecting the unit as investors consider that it is better to have profits in the pocket before the weekend, especially after the two reasons mentioned above: Trade war and the price unable to break above the 20-day moving average.

Currently, Soybean prices are declining by 1.0% as it is trading at 8.192. On the week, however, the unit is posting its first positive week in the last six.

Technically, the commodity looks bearish, but the good news is that it will close the week above the 8.000 area.

Sugar breaks 0.1135 critical support

The price of sugar is trading considerably lower on Friday as global surplus is pressuring prices to the downside. Also, the trade war is taking investors attention.

Sucrose is trading 2.5% down on the day as it is extending losses for the third day. On Friday, Sugar broke below the 0.1135 critical support before pricing as low as 0.1120, its lowest level since October 4, 2018.

The outlook is for more losses as sugar prices will remain flat until de the end of the next year, according to MM Murugappan, chairman of the Indian based Murugappa Group.

“The sugar market will face a country and worldwide surplus until next year,” Murugappan said, “so the sugar-year after next should see some increase in demand.”

If sugar extends its decline, it will find support at 0.1100 and 0.1070. Below, check for the psychologic level of 0.1000 as a buying zone.

This article was originally posted on FX Empire