Soybean price hovered near the short-term MA while holding steady above the medium-term MA. The choppy market has been fueled by the opposing forces of a stronger US dollar and optimism over Chinese demand.
In the near term, the agricultural commodity may trade sideways as investors await additional cues from the upcoming economic data. The US PCE inflation data and nonfarm payrolls report are set to impact the US dollar and dollar-priced assets like soybeans. Hints at raising inflation will increase bets on Fed’s interest rate hikes.
Soybean price trades sideways ahead of crucial inflation data
Soybean price has been choppy in recent sessions as a stronger US dollar weighs on the agricultural commodity. Similar to other dollar-priced assets, soybean demand tends to move inversely to the value of the greenback. This is because a stronger US dollar renders the asset more expensive for buyers holding foreign currencies.
On Tuesday, the dollar index broke out of its three-day sideways trading to hit a fresh two-month high. Notably, it has been in the green for 10 out of the past 14 sessions. This uptrend is set to continue in the short term as a surge in crude oil prices bolsters bets on Fed’s interest rate hikes.
Investors are now keen on Wednesday’s US PCE inflation report and the nonfarm payrolls data on Friday. Hints at rising inflation will boost Treasury yields and the US dollar while weighing on soybean price.
Meanwhile, US soybeans remains subject to the additional 10% tariff imposed by the Chinese government. This came as a disappointment to traders who had been keen on the US-China summit held recently.
Following the even, the two countries announced reciprocal tariff cuts worth $60 billion. While raw soybeans were not part of the package, Chinese state buyers have stepped up their purchases of the US product. The purchases of companies like COFCO and SInograin exceeds 12 million metric tonnes, which is close to half of the 25 million metric tonnes that President Xi’s administration committed to buying annually till 2028.
Soybean price technical analysis
Soybeans price chart | Source: TradingView
CBOT soybean futures traded sideways on Tuesday, remaining close to the one-month low hit in the previous session. The decline observed in the new week has pushed it below the trendline that has offered it steady support in recent weeks.
As seen on its daily trading chart, soybean price is hovering around the short-term 25-day EMA while remaining above the medium-term 50-day EMA. While this setup points to a choppy market in the near term, the bullish golden cross pattern formed in early July is still in place.
In line with these technical indicators, the range between the steady support at $12.80 and the resistance at $13.10 is worth watching in the near term. Indeed, its RSI of 51 substantiates the thesis on sideways trading.
A retest of the range’s upper border will yield a rebound above the crucial trendline. Further gains may be curbed at $13.20. On the lower side, a decline past 12.80 would invalidate this thesis.
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