IFC Markets

Master Trader
Oct 31, 2012
1,938
9
84
London (Great Britain)
www.ifcmarkets.com
Possible Chinese imports decline bearish for soybean prices

China plans to lower soybeans imports by reducing soybeans use for feed. Will the soybeans price continue declining?

China plans to lower soybeans imports by reducing soybeans use as an animal feed. China’s Feed Industry Association last Friday approved new standards for the feed for pigs and chickens, lowering the protein levels in pig feed by 1.5 percentage points and those for chickens by one percentage point. If successful such measures may cut the country’s annual soymeal consumption by 11 million tons and soybeans by 14 million tons, according to the agricultural ministry. Brazil, which has benefitted from increased demand after China’s reciprocal tariffs raised the cost of US soybeans for Chinese importers, is set to harvest a record crop. And US Department of Agriculture estimates world ending stocks for 2018/19 will be higher. Lower Chinese import demand while supply increases is bearish for soybeans prices.

Soybean_O_1November2018.png


On the daily timeframe the SOYB: D1 is falling after retracing to two-month high in mid-October.

  • The Parabolic indicator gives a sell signal.
  • The Donchian channel indicates downtrend: it is tilted lower.
  • The MACD indicator gives a bearish signal: it is below the signal line and the gap is widening.
  • The Stochastic oscillator has breached into the oversold zone, this is bullish.
We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 844.10. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian boundary at 895.70. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (895.70) without reaching the order (844.10), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary


Position Sell
Sell stop Below 844.10
Stop loss Above 895.70