Soybeans consolidate due to fundamentals

Note: This section contains information in English only.
Source: Dukascopy Bank SA


Since global inflation started to reach record high levels during late 2021, the prices for food has been skyrocketing. On the Soybean price charts it has resulted in a 47.70% surge from the November low level up to the high that was hit on February 24.

However, since late February and throughout all of March, the price has been fluctuating sideways in the range between 1,623.40/1,634.00 and 1,733.90/1,760.00. Note that the, resistance zone includes the commodity's all-time-high levels from 2012. Meanwhile, the sideways trading can be explained by deep analysis of the food producing sector.

In general, due to the Russian invasion of Ukraine and the support of Belarus to Russia given via the use of its territory for the invasion, the western nations sanctioned Russian and Belarusian exports of fertilizers. The fertilizers are needed and imported by Latin American and North American producers of wheat.

Due to the jump in fertilizer prices, the producers of wheat are switching to less chemical nutrition requiring foodstuffs. Namely, they are planting soybeans, which take approximately 3.5 less fertilizer. This switch has caused a downwards pressure on Soybean prices, as the farmers lock in the prices for soybeans via the futures market, and reveal that there will be a lot more supply.

In regards to the near term future, a technical review is done. If the price for food continues to surge due to ongoing inflation, the price for soybeans would test the resistance of the 1,733.90/1,760.00 zone. Higher above, round price levels might act as resistance.

On the other hand, a decline of the price is expected to first look for support at 1,623.40/1,634.00, before approaching the 2022 low level zone at 1,544.00/1,565.00.
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