Sunday, July 17, 2016

Soybeans: Another Opportunity To Go Long

In March I posted a piece on soybeans fundamentals. Since that time soybean prices have been in a strong bull market:


After an impressive increase of around 31% in just two months soybean prices are in a correction mode now. In my opinion, it may be a good opportunity to open long positions in soybean futures. Soybeans price chart looks good in the medium-term but, what is more, a bullish thesis on this grain is still supported by fundamentals.

For example, since the 2009 / 2010 season the world demand went up from 238.55 to 328.78 million metric tons (an increase of 37.8% or 90.23 million metric tonnes). However, the supply increased by only 25.3% or 65.86 million metric tonnes: 

                   source: United States Department of Agriculture

Of course it is China that is responsible for this additional huge demand for soybeans (nearly half of the additional demand is attributable to China). 

What is more, the USDA expects that during the ongoing season the demand should be higher than supply by 2.83 million metric tonnes (328.78 vs 325.95 million metric tonnes). 

And basically, when the demand is higher than the supply, the prices of such an asset should go up. 

Those looking for additional information on soybeans and other agri-futures - visit this page:

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