In my Sept. 3, 2020, column, “Soybeans Are Headed for a Bull Market in 2021,” I discussed the developing bull markets in soybeans and the entire grain complex. At the time, spot soybeans were $9.60 a bushel and the Bloomberg Grains Spot Index was at 194.
The reasons for my bullishness were twofold. First, a five-year consolidation in the Grains Spot index that held exactly at 24-year support. Second, spot soybeans had broken out of a two-year base, hurdling an eight-year downtrend. In the addition to the extremely bullish technical conditions, the Midwest had been experiencing dry weather—accompanied by strong demand from China.
Fast-forward to now. The Bloomberg Grains Spot Index reached the midpoint of the 250-300 upside target that we projected—275—three weeks ago. You can see from the chart the orange-dash trend lines at 280 and 300, where rallies stalled and/or where declines accelerated. Further gains from here will be hard-fought.
Similarly, spot soybeans have reached their upside target. Climbing to $14.38 a bushel, soybeans neared the lower end of the $14.50-$15.00 trendline resistance—the zone where advances stalled and/or reversed. The easy lifting from our buy signal in September is over for now.
Long-term, my work indicates that it will take time to overcome significant 12-year resistance between $15.00-$18.00. But looking out further into the decade ahead, it wouldn’t surprise me to see soybeans soar to $25.00-$30.00.
Andrew Addison is the author of The Institutional View, a research service that focuses on technical analysis.
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