04-30-2019: July Soybeans: Flooding Planting Delay Causes Switch to More Soybeans

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Introduction
Intermarket
Parabolic

Nirvana
News
Point & Figure
Cyclic/Seasonal

Internal Progrm
Third System
Margin

Historic Range
Commitment
Volatility

Random Chart
Options
Calendar Spread

Level Table
Other Factors
Recommendation

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Introduction

Acreage planned to be devoted to already way over-supplied corn has been switched to soybeans as flooding made it too late for corn but still in time for soybean seasonal planting. The result has been a meltdown in soybean prices aggraved by the U.S. Administration's trade disputes hurting farmers nationwide.


Intermarket Analysis

We fed Soybeans, Soybean Meal, and Soybean Oil into a neural network to get the following result:




Parabolic Chart

July Soybeans:

Parabolic Chart


Nirvana Chart

July Soybeans:

Initial Chart


News Analysis

Both soybeans and Malaysian palm oil futures have been trading steadily lower. Global equity markets have been lower. Domestic markets have been boosted by Amazon sales exceeding expectations despite price increases. French consumer confidence was weaker-than-expected. Generally weak worldwide economic news coupled with stronger domestic economic news has boded for weaker grain prices in general. The soybean market is now considered "oversold" and looking for a short-term bounce. Soybean meal has seen encouraging export data boosting the complex and taking the lead. There is concern that a collapse in the Argentine peso will lead to farmers there being tight hoilders of soybeans, leaving crushers without soybeans to crush. It also leaves the world's top soymeal exporter light on the product. The International Grains Council raised 2019-20 world soybean production estimate to 361 million tonnes up from 359 previously. Stockpiles are seen at 56 million tonnes versus 51 million previously. The market appears to have priced in negative supply side news for the soybean market at least for now. The Buenos Aires Grains Exchange left their Argentine soybean production unchanged at 55.0 million tonnes with 50.7% of the crop harvested. Weekly U.S. export sales were 586,300 tonnes for the current marketing year and 22,700 for the next marketing ear. Cumulative soybean sales stood at 88.0% of the USDA forecast for this season versus a 5-year average of 94.7%. Meal sales came in at 329,100 tonnes for the current marketing year and 68.900 for the next marketing year. Net soyoil sales came in at 19,600 tonnes.

Farmers faced with significant planting delays caused by weather in the Midwest may switch from corn to soybeans, the latter able to be planted later. Snow is expected across portions of the Midwest and northern Plains, preventing planting. Soybean futures have fallen on prospects for increased U.S. acreage, and questions about demand from top buyer China locked in a trade dispute with the U.S. The spread of African swine fever in China's hog herd has dampened meal demand. Brazil's soybean crop is poised to become the second largest in history. Farmers there are forecast to collect 115.46 million tonnes of oilseed below last year's record output of 119.3 million tonnes.

The Iowa Soybean Association angered Republicans by stating that a water quality funding bill approved by the Iowa Legislature was "tmid" and only "nibbling around the edges of what's truly needed."

After severe flooding in Nebraska, the USDA National Resources Conservation Service (NRCS) is providing funds for Nebraska farmers to plant cover crops to manage cropland acres. The funding will address concerns like erosion and water quality, resulting directlyi from March, 2019 severe weather. Cover crops can stabilize the soil, prevent further erosion, and improve soil health. Irrigation equipment has been damaged there by flooding.

Soybeans and other U.S. agricultural products have been a prime target for retaliatory tariffs thoughtout ongoing trade conflicts. The soybean market has huge supplies causing the market to be reluctant to rally too much. Talks between Presidents Trump and Xi got the grain market to pop a little. Funds currently have a huge short position, but could be set to buy back some of those positions if there is any kind of trade deal announcement. With quiet weather, markets on more of a "China watch."

A storm system this week is projected will have an average track corss the northern Plains, Rockies, and into the Midwest. It could be detrimental to the soybean belt, already hard hit. Major record-breaking flooding has occurred in several states.

Inaction on a biodiesel tax credit extension has created uncertainty for the industry and Midwest grain farmers. A tax credit was previously issued to provide a $1-per-gallon tax credit to blenders which blend biodiesel with petroleum.

When rainwater innundated Hamburg near the Missouri River, 50,000 bushels of soybeans which had been stored in grain bins were spoiled or rotting. Half a million bushels may be affected by he three most impacted Iowa counties.


Point & Figure Chart

400.0|                                                                  T  4/26
     | CBT - Jul-19 Soybeans, 5000 bu., c/bu.      Cm.=0.60  Lim.=54.0
     |
     |
     |
400.0|_________________________________________________________________________
     |
     |
     |                 X
     |                 XO
340.0|_________________XO__X___________________________________________________
     |                 XO  XO
     |                 XOX XO
     |                 XOXOXO
     |                 XOXOXO  X
280.0|_________________XOXO_O__XO______________________________________________
     |                 XOX  O  XO
     |                 XO   OX XO
     |                 X    OXOXO
     |               X X    OXOXO
220.0|_______________XOX____O_OXO______X_X_____________________________________
     |               XOX      OXO      XOXOX
     | X X         X XO       O O      XOXOXO
     | XOXO        XOX          O      XOXOXO
     | XOXO      X XOX          OX   X XOXO O
160.0|OXOXO______XOXO___________OXO__XOXOX__O____X_____________________________
     |O O O      XOX            OXOX XOXO   O    XOX
     |O   OX     XO             OXOXOXO     OX   XOXO
     |    OXO    X              OXOXOX      OXO  XOXOX
     |    OXO    X              O OXOX      OXO  XOXOXO
100.0|____OXO____X________________O_O_______OXO__XOXOXO________________________
     |    O O    X                          OXOX XOXOXO
     |      O    X                          OXOXOXO O O
     |      O    X                          OXOXOX    O
     |      OX   X                          OXOXOX    O
 40.0|______OXOX_X__________________________OXOXO_____O________________________
     |      OXOXOX                          OXO       O
     |      OXOXOX                          O         O
     |      OXOXOX                                    O
     |      O O O                                     O
980.0|________________________________________________O________________________
     |                                                O
     |                                                OX X     X
     |                                                OXOXOX   XOX
     |                                                OXOXOXOX XOXO
920.0|________________________________________________O_OXOXOXOXOXO____________
     |                                                  OXO OXOXO O
     |                                                  OX  OXOX  O
     |                                                  O   OXO   O
     |                                                      O     O
860.0|_________________________________________________________________________
     |
     |
     |
     |
800.0|----|----|----|----|----|----|----|----|----|----|----|----|----|----|---
              111                    1111       1            1111
      6677788902234455556666777778899011211227792134456677888001223
      2301211320112201221233000110202212013120101210220202122020200
      6070002091672850454800577149686012130033358455434026003352418
The above chart is giving a conventional sell signal.


Cyclical and Seasonal Factors

We are headed toward a cyclical high and a seasonal down period.

Cyclicals Cyclicals Seasonals
Seasonals


Internal Program

Our best-performing internal program is "Trader". It is giving a buy signal.

Internal Printout 1 Internal Printout 2

Results of "Trader" for Soybeans (blue lines = successful trades, red, unsuccessful): (Always in the market.)

Results


Third System Confirmation

Our third system is working on a long-term buy signal. (Note, disregard the year on the chart. Our regular readers know this is not a Y2K-compliant system, but it still works.)

Third System


Margin

The point value is $50. Initial margin on a single contract is $1,925. Use of options is advised.


Historic Range

Scale traders are not a factor in this price range.

Historical Chart


Commitment of Traders

Commitment 1

In the chart below, the yellow line is the futures price, read on the right axis. All other colors are read on the left axis. Blue is small speculators. Red is large speculators. Green is commercials. Large speculators with the best track record are getting increasingly-short.

Commitment 2

Interpretation of a Different Site Below (Their trader categories vary from ours):

Commitment 3


Volatility / Probable Range

FB 1 FB 2

The average volatility shown below suggests that a change in major trend to up is imminent at a volatility low point.

Range/Volatilitiy Chart


Possible Future Prices

Random Chart


Option Recommendation

Our option trade recommendation is to Buy (1) Soybeans September 900 Call and Sell (1) Soybeans September 880 Call @ 7-3/4 to the sell side or greater.


o 1 o 2 o 5


o 3


o 4


Calendar Spread

What the Jul. - Nov. calendar spread suggests to us is that buying the near contract and selling the far one is at most times not profitable, which we think is a sign that these futures may go down in the long run. The best time to enter or leave the above spread is when it is at -21.00 or wider selling the far as prices are falling and then buying the near, and exiting or entering when it is at -17.00 or narrower buying the far as prices are rising and then selling the near. At this time, we appear to be near the sell the far, buy the near point.





Level Table:

Level Table

The path of least resistance is down.
116|                                                                 T  4/26
 CBT - Jul-19 Soybeans, 5000 bu., c/bu.      Cm.=0.60  Lim.=54.0
     |
     |AAA
     |AAAABC
111|AABBBBC__________________________________________________________________
     |AABBCCC
     |AAAAABBBBCCC
     |ABBBBCC
     |BBCC
106|C________________________________________________________________________
     |C
     |CC
     |CD
     |DD
101|D________________________________________________________________________
     |D
     |D
     |DD
     |DD
960|DDDDG____________________________________________________________________
     |DDDDDGGGHHHQQQ
     |DDEEEEEGGGGGHHHHQQQQQQQQRRRRSSSSSTTTUUUUUUUV
     |DEEEEEEGGGGGGHHHHMMMOQQRRSSSSTTTTUUUVVVVV
     |DEEEEGGHHHHJMNOOOPPPPPPQRSSTTTVVVVVVWWWWWW
910|DEEEEEFFFGHHHHHJLMMMMNOOOOOOOOOPPPPPPRRRSSTTVWWWXXXXXXXXXYYYZ____________
     |EEFFFFFFHJJLLLMMMMMMNNNNOOPPRRRWWWXXYYYYYYZZZZ
     |FFFFFJJJKLLLLLLLMMNNNOPPYYYZZZ
     |FFFJJJJJJJKKKKKLLLNNNNOZZ
     |FFJJKKKKLZ
860|KKKKZ[[__________________________________________________________________
     |   <<<
     |
     |
     |
810|-A-B-C-D-E-F-G-H-J-K-L-M-N-O-P-Q-R-S-T-U-V-W-X-Y-Z----|----|-- TPO= 0.000
                             1 1 1 1 1 1 1                            
       5 5 5 6 6 7 7 8 8 9 9 0 0 1 1 1 2 2 1 1 2 2 3 3 4 4           4
       0 1 2 1 2 1 2 0 2 0 2 0 1 0 1 3 1 3 1 2 1 2 1 2 1 2           2
       1 4 9 2 6 1 5 8 2 6 0 4 8 1 5 0 4 1 5 9 2 7 3 7 0 5           6


Other Factors

Multiple Chart Indicators Summary
Multiple Chart Indicators Summary


Here's an intraday chart for a previous day ( 7/11 ).

Intraday Chart


                 Risk Versus Opportunity Report
                ________________________________

                     SN9     July Soybeans

                      High Price:  886
                   Current Price:  867
                       Low Price:  829

                            Risk: -0.044
                     Opportunity: -0.089

                    (O/R) Ratio =  2.000


Overall Recommendation

Decision Weighting Factors
FactorsWeighted Points
Inter-Market Analysis - 1
Parabolic Chart - 1
Nirvana Chart - 1
News - 1
Point & Figure - 1
Cyclicals + 1
Seasonals - 1
Internal System 1 + 1
Internal System 2 0
Third System + 1
Historic Range 0
Commitment of Traders - 1
Range/Volatility + 1
Level Table - 1
Other Factors - 1
Total - 5
Place 7 July Soybeans on a Sell Watch with stoploss @ +32-1/4 above the get-in point when recent price is represented as "867.00".
____________________________________________________________________________________________________________________________________________W.G..