The wisest advice I received from a not so wise marketing guru was "never sell soybeans in June". This advice tends to hold true. If you are a brokerage client of mine you received communications recommending that we sell the option floor strategies we bought back in February and March. Every position made money and did what it was intended to do which was to set a higher floor than what the crop insurance would do and to allow for upside marketing opportunities which cash contracts would not do. We have now reached an interesting time where the grain price cycles are bottoming right at the beginning of the period when grain prices typically soar. It is my feeling that exiting short positions (or taking re-ownership) makes a lot of sense now.
You typically get 2-3 opportunities to sell grain each year. The greatest opportunity typically lies just ahead of us in the June/July weather market.
Weather markets don't complete in May. We are just entering the time for a weather rally to materialize.
The current RSI reading is at the same level as the 3 previous weather rallies.
The daily December Corn chart shows that prices happen to be at our crop insurance base price. I suspect that price will drift far enough below this level by Tuesday's WASDE report that it will trigger a CCI buy signal.
Soybean weather rallies are much different from corn in that they can become prolonged events while corn can start and finish in a matter of weeks. Most of the same technical conditions exist for soybeans that exist for corn this time however and I expect both to rally at the same time as a result.
The bean chart below has several noteworthy things happening:
1. Beans will trigger a buy signal on the CCI index in a matter of days.
2. Beans have broken below the yearly cycle trend line. Rallies into new yearly cycles tend to be very strong (notice the rally in June of last year?).
3. we got a possible hammer candle Friday. Hammering out a bottom is what these indicate.
4. Price has broken below the 200 day moving average but price has just moved into the 200 week moving average on the weekly chart.
The weekly chart reveals even more information:
1. The 200 week moving average tends to act as a support and resistance area for soybeans. I expect we will see prices rebound from here on out.
2. Notice how the 200 week average is beginning to flatten out. This bodes well for soybean prices longer term.
While I don't find sentiment readings particularly useful for soybeans, the optix readings do show that most traders are extremely bearish. There is a lot of room for beans to move higher from here.
How high grain can go this summer remains to be seen. $10.80 Nov soybeans and $4.30 Dec corn would be conservative estimates. The easiest way to take re-ownership of bushels you have already sold would be through a brokerage account.