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South Central Iowa | I am looking at a simple range in the 2017 chart that may form and mirror some of the price action we saw in the 2016 chart. I know it is fun to get caught up in the euphoria and think we will leap frog up +20c every day, but generally, markets do not move like that. I am posting this to reassure that even if we pullback, it is not necessarily problematic.
Last year we traded a range most of the fall between roughly $9.42 and $10.18; a 76c range. We had brief moments outside of that band, but for the most part, we made trips within, touching the top twice and the bottom five times before breaking out in the winter. Currently, we appear to possibly be setting up for a range of $9.23 to $9.88; a 65c range.
It's something I will be looking at and cognizant of. If it does establish, we may not bounce as many times or perhaps we will touch the top more than the bottom, every year is different. This upcoming Wasde is unlikely to drop soybean yield dramatically and with harvest starting shortly, it is easy to see why we may have some choppy sideways trade. This is opportunity on many fronts. If you need to sell some as you harvest and you have a 10 day open window for holding grain, you can sell at the upper part of the range. If you want to reown, once you have sold, you can wait for the lower part of the range to acquire your preferred upside instrument. The upper end is a good place to take profits against as well. I personally wouldn't spec short the top end, mostly because I believe this soybean crop is 3+bpa below the USDA number. But when the trade recognizes it is the tricky part.
We still have a tiny 1/4c gap on the weekly and under which would fill with a touch of $9.52'0; we probably see that price again. Volume was finally there today for #SOY! That is something we needed. As I mention in the chart, it was the first voluminous upday since the July high. You will notice the arrows with the volume bars. Last year, volume shrank from July to the first of September, then rose throughout the harvest while price held its range. That showed the market taking the otherside of farmer selling and accumulating a long position. I would expect them to be eager to do it again this year, especially because the reason is greater. So if we are holding our range and volume is increasing into October, that points to good things for the winter rally!
Don't forget, we know the crop is crap, but the trade will go along with 49.4 or 48.3 or 47.9 or 48.9 or whatever. They also know we have 7 million more acres, a carryin that will shrink over the last Wasde, but still be over 300 million, and a "supposedly" large SA crop that is undersold and a new one that will be planted. They aren't going to get overly worked up over 48 something and until the tightness of the more likely sub 46 crop comes into play, we will build a base. Even if the trade did believe currently that our yield was sub 46, they probably would want to play it slow knowing we would see some dips from early hedge pressure. I have heard a rule called 50/50 which is don't buy soy or corn until 50% of the crop is harvested or we are 50% through October. There are a lot of sayings though.
Good Luck!
Edit to Add, $9.88 is not established as the topside of any range yet. I am tentatively working with it because it was our high going right into the August Wasde and it was the first place we caught traction and closed and opened around when we fell from our July high of $10.47. Also, those numbers are rounded price-action area numbers. They just mean that support or resistance trades around it; a zone type number, not hard and fast. I think they are simpler to understand and remember.
Edited by Conan the Farmer 9/5/2017 18:37
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 (NovSoy2016Range.png)
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 NovSoy2017Range.png (71KB - 70 downloads)
NovSoy2016Range.png (66KB - 72 downloads)
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16 & 17 Nov Soy Charts
