
- After failing to establish a bullish technical reversal pattern last week, soybean futures have extended ongoing secondary downtrends this week.
- Much of the pressure has come from continue noncommercial selling, with all the cool kids in the industry repeating USDA's fictitious and bearish ending stocks numbers.
- The reality is the cash market has already started to turn bullish, a factor that should eventually turn both futures spreads and futures.
Returning to the popular subject of the soybean market, like a former President of the United States saying, “Mission accomplished”, my recent quoting of Colonel Hannibal Smith, “I love it when a plan comes together” may have been premature. Despite what it looked like at the time, the futures market did not establish a bullish spike reversal on weekly charts last week, confirming a normal seasonal low weekly close the Friday before. Instead, we’ve seen November extend the secondary (intermediate-term) downtrend on its weekly chart to a low $11.8450 this week, its lowest level since hitting $11.84 on March 29. If looking for a silver lining, this is in line with the technical target of $11.61 established with the bearish breakout the week of July 26. Having said that, contracts are in position for weekly stochastics to establish bullish crossover yet this week, so we have that to look forward to.

I know the popular thing is to be bearish soybeans at this time, with all the cool kids competing to see who can quote USDA’s fictitious and incredibly bearish ending stocks numbers more often, but the reality is the cash market is far from bearish. What I find humorous is so many in the industry who hold themselves out as “fundamental analysts” don’t want to be bothered with analyzing real market fundamentals. But it has always been that way in the world of government regurgitators.
The cmdty National Soybean Price Index (NSPI, weighted national average cash price) did complete the bullish spike reversal on its weekly chart last week, though it did not stop it from falling along with futures this week. More important, the cmdty National Soybean Basis Index (NSBI, weighted national average) continues to firm, calculated Wednesday at 42.5 cents under November futures. A good friend of mine used to talk about Grains’ Golden Rule: First basis, then spreads, then futures; meaning if the NSBI continues to firm spreads and futures will likely follow.