Saturday, July 23, 2016

Soybeans - A Nice Buying Opportunity

A few days ago I posted a piece on soybeans. The main thesis was that soybean prices were strongly supported by fundamentals (demand higher than supply).

However, the problem is how to find the best entry point to get involved on the long side of the trade.

For long-term players there is no problem - buy on any weakness in prices.

Well, as for soybeans or any other futures contracts, I am not a long - term trader / investor. As a matter of fact, I am no trader at all (commodities are about trading, not investing). However, sometimes, when something looks good, I get involved and bet some small amount of money (in such circumstances my hidden nature of a casino gambler emerges from the darkness). If such is a case, I try to find the best entry point.

So what is my entry point for soybeans? Look at the chart below:

The chart shows soybean prices measured in gold (lower panel of the chart). It looks like whenever soybean prices, expressed in gold, are close to the red line there is a nice buying opportunity (black circles). What is more, now we are close to such an entry point. Since the June peak in soybean prices (upper panel) these grains corrected significantly. So, why not to try?

To close the trade I will use the green area on the lower panel. This area indicates the best selling opportunities starting from middle 2014.

Note: this post is not a buying / selling recommendation. As my readers know, I am not in a business of publishing entry / exit points in commodities, stocks etc.


  1. Hi Simple, I once read Soybeans have a positive correlation with Silver. Could Silver prices be turning around too?

  2. Roger,
    Thanks for your remark. I posted a short comment on that isssue.