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Wednesday, 30 January 2019

Commodities Soybean Technical Analysis

Commodity Soybean has see steep price decline ever since year 2012 reach all time high of 1800 (estimated) in June 2012.

Recently there is a negative new that cause bearish, gloom and doom sentiment that hit commodity soybean pretty much is the Trade War Tensions between United States and China in year 2018.

To counter or retailate US trade war additional tariffs imposed on China, China asked its farmers to grow more soybeans amid trade fights with US.

https://www.npr.org/2018/06/19/621448109/china-tells-farmers-to-grow-more-soybeans-amid-trade-fight-with-u-s

Soybean - Teucrium Soybean Fund ETF has seen price bottoming at price level 15.26 in September 2018 where Trade Tensions ran high with each United States and China both imposing an additional trade tariffs targetting at each other.

However, currently market sentiment has turned for the better with ongoing United States and China meeting and talks to resolve trade war tensions and vowed not to raised additional tariffs targetting at each other and enter a truce of 90 days since the G20 meeting in 30 November 2018 hosted by Argentina.

Recently, China has " took more steps to defuse trade tensions with the U.S., confirming it will remove the retaliatory duty on automobiles imported from America and preparing to restart purchases of American corn" and "China also may buy at least 3 million metric tons of American corn" reported by Bloomberg in 14 December 2018.

https://www.bloomberg.com/news/articles/2018-12-14/china-cuts-tax-on-u-s-vehicles-in-move-to-soothe-trade-tensions

https://www.ttnews.com/articles/trade-war-drives-farmers-corn-china-shuns-us-soybeans

https://www.reuters.com/article/us-usa-trade-china-soybeans/china-poised-to-buy-more-u-s-soybeans-sources-idUSKCN1OJ2O1

https://www.chicagotribune.com/business/ct-farmers-trade-war-aid-checks-20180923-story.html

An article "A Tale of Two Commodities: China’s Trade in Corn and Soybeans' by Fred Gale Economic Research Service, USDA quote "Since the 1990s, the conventional wisdom was that China‘s growing demand for corn to feed an expanding livestock herd would lead to rising Chinese imports, boosting grain prices and incomes for U.S. farmers eager to find new sources of demand. However, China‘s growing 0 20 40 60 80 100 120 140 160 2001 2002 2003 2004 2005 Yuan/mu Corn Soybeans Source: National Development and Reform Commission Note: 15 mu = 1 hectare; 8.28 yuan = $1 0 5,000 10,000 15,000 20,000 25,000 30,000 1992 1994 1996 1998 2000 2002 2004 2006 1,000 HA Corn Soybeans Source: China National Bureau of Statistics Gale Chap.3: A Tale of Two Commodities 79 China's Agricultural Trade: Issues and Prospects demand emerged in the form of soybean imports that grew beyond most forecasters‘ expectations. China‘s corn imports have not yet materialized."

https://ageconsearch.umn.edu/bitstream/55021/2/Gale%20Chapter%203.pdf

China need massive imports of Corn to feed its livestock (Pigs) and Chinese one of the main food source staple is stem from Soybeans where it is made into beancurd (Tofu), soy milk, soy flour and soy protein. Soybeans are processed for their oil & protein for animal feeding industry and used for non food industrial products.

http://ncsoy.org/media-resources/uses-of-soybeans/

Wyatt Mingji Lim, Co-Founder at DefensePoliticsAsia.com (2017-present) in quora  quote "while as recent as 1995, China was producing 14 million tons of soy beans and consuming 14 million tons - the number ballooned to 70 million tons in 2011.

So if China were to produce all 70 million tons of soy bean they need, it will mean that they need to convert 1/3 of the grain land to soybean - forcing China to import 160 million tons of grain (which is also more than 1/3 of the total grain consumption in China in 2011).

So, yes China is big, but arable land, there is only so much. China have a massive population to feed, thus, converting land for grain, to soy bean - is extremely impractical, not to mention, impossible.
And just in case you want to say, “我们可以不吃豆!(we can don’t eat bean)” - a lot of the soy bean is not for you, its for your pigs"
https://www.quora.com/Why-does-China-import-soybeans-from-the-US
https://www.fastcompany.com/90240606/chinas-hunger-for-soybeans-is-a-window-into-an-encroaching-environmental-crisis
http://www.earth-policy.org/books/fpep/fpepch9
Commodity Soybean indeed is a buying opportunity should the trade war tension ease and resolve couple with the weakening US dollar could see commodity corn priced in US dollar price rally to new highs.

Lets take a look at the Technical Chart below deciphering price action setup.

Teucrium Soybeam ETF Monthly Histoical Chart 30.1.19


Teucrium Soybeans Monthly Histoical Chart With Technical Analysis 30.1.19


Based on above Technical Anlsysis, Teucrium Soybean Fund ETF all time high is 28.88 seen in June 2012. Fair Value works out to be 14.44 and undervalue price works out to be 7.22. Chart display clearly a bullish price action setup with certain indicators like 20 Day Simple Moving Average (SMA) seen candlestick close above. Price in seen moving in a price channel comprising upper and lower orange color lines and green color median line. Potential big rounding bottom chart formation signals bullish market sentiment is on the cards where the recent trade war tariffs has seen price bottoming out at 15.26 low in September 2018 and price rebound to last close trading price at 16.65. My target for Teucrium Soybean ETF are lised below:

1) 1st Target resistance is between 20.50
2) 2nd Target resistance is 22
3) 3rd Target resistance is 25.25
4) 4th Target resistance is 28.88
5) 5th Target resisstance is 44

http://teucriumsoybfund.com/

Finviz Soybean Monthly Historical Chart 30.1.19


Finviz Soybean Monthly Historical Chart With Technical Analysis 30.1.19


Above Finviz Soybean Technical Analysis Chart display bullish price action setup. It has a potential rounding bottom chart formation couple with falling wedge chart formation illustrated drawn in black color lines. Price has reached support and supported by light blue color classical neckline that connects all the trough and resistance couple with falling wedge black color line support and orange color line rounding bottom support. Price may see resisted and backtest resistance turn support approaching four orange color lines target resistance.


Soybean Historical Chart 30.1.19 source from Barchart


















Soybean Historical Chart 30.1.19 with Technical Analysis source from Barchart























Disclaimer: All news, information and charts shared is purely by my research and personal views only. This is not a trading recommendation or advice but on the basis of sharing information and educating the investment community. Different traders and investors adopt different trading strategies and risk management approach hence if in doubt please approach or seek clarifications with your Financial Adviser, Broker and Banker.

1 comment:

  1. great thanks https://docs.google.com/spreadsheets/d/1ov9ixS19JOjE2HPNJ_u6mU9AMFx13muG14d_L2pTYkU/edit?usp=sharing

    ReplyDelete