Soybeans

By Ilene

Chris Kimble sent me a price chart compilation of a commodity that is doing poorly like the rest of commodities — soybeans. The left image shows soybean prices essentially falling off a cliff; the right image shows the Teucrium Soybean ETF (SOYB) doing the same.

The charts provide an idea for attempting to find a low point for entering a turnaround trade using the ETF SOYB.

Yahoo’s historical chart for SOYB similarly shows how the ETF may be re-testing Sept. 2014 lows with heavier volume than usual.

Chris’s negative sentiment chart shows that only 21% of soybean speculators are bullish. Attitudes are well below merely “excessively pessimistic." (Contrarian traders take note.)

The news flow on soybeans explains the price weakness and negative sentiment. For example: Rent walkouts point to strains in U.S. farm economy:

CHICAGO (Reuters) – Across the U.S. Midwest, the plunge in grain prices to near four-year lows is pitting landowners determined to sustain rental incomes against farmer tenants worried about making rent payments because their revenues are squeezed.

Some grain farmers already see the burden as too big. They are taking an extreme step, one not widely seen since the 1980s: breaching lease contracts, reducing how much land they will sow this spring and risking years-long legal battles with landlords.

Built into the problem of farmers abandoning their leases and reducing their sowing activities is the consequence that lower quantities of crops will eventually be a pressure for some price recovery. For soybeans, the government forecast for this year’s production to decline by 4% compared to last year’s.

CHICAGO — The bear markets in grains and oilseeds are starting to wear on U.S. farmers as the government predicts they will plant fewer soybean, corn and wheat acres this year.

Domestic growers will sow 83.5 million acres with soybeans, the U.S. Department of Agriculture said Thursday in its first planting outlook for the season. That’s down from a record 83.701 million last year and is a surprise reduction for analysts who forecast 86.028 million, on average, in a Bloomberg survey.

After record American harvests, prices have tumbled so much that about half of U.S. corn and soybean farmers are in the red and the rest will barely break even, according to Chris Barron, who farms 7,000 acres near Rowley, Iowa, and owns the management advisory Ag View Solutions. Declines in planted acreage can help to trim supplies and erode inventories. (Surprise drop for U.S. soybean plantings pushes prices higher.)

The lower outlook for soybean supply may help support the prices and may be fueling a current small bounce in the soybean ETF.