US, China bury the hatchet, give soybean so much to cheer

By Manoj Kumar Jain

The world’s two largest economies US and China recently set aside their differences and struck a trade agreement. The pact will allow China to resume imports from the US. The news had visible results. CBOT soybean contract jumped almost 2 per cent.

Soybean prices were under strain after China’s lower imports from the US last month. Both have agreed to make amends and restart trade. And this is a big positive piece of news for soybean prices.

China is the largest importer of soybean from the US. In the domestic circuit, the prices have been sandwiched in a tight range for the past one month. But the recent Chinese decision is expected to do good.

Spike in crude oil prices and the rupee’s downward trend are also positive for soybean. Analysts are expecting that oil prices may soon surpass the $ 80 mark in international markets and the rupee could crash to 70 in coming days.

Should it happen, we can’t rule out soybean prices at Rs 4,000 per quintal in domestic markets. Considering its fundamentals, we expect this week to be positive for soybean trade and the price graph could hit off Rs 3,880-3,920.

Technical Chart of Soybean (Source: Investing.com):

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Technical overview:

Soybean had hit a rough patch last month when it touched a low of Rs 3,589. But it has bounced back since. On the technical chart, soybean is looking strong and showing a V-shape recovery from lower levels.

We expect this rally to go up to Rs 3,880-3,920 in coming days, provided soybean sustains above Rs 3,780 for two trading sessions. On the other hand, if it cracks and stays below Rs 3,680, it will revisit to Rs 3,620-3,580 zone. But such chances are very remote.

We expect traders to buy soybean in Rs 3,760-3,740 with a strict stop loss below Rs 3,680 on a closing basis and upside price target of Rs 3,880-3,920.

Recommendations:

Soybean buy Rs 3,760-3,740 SL Rs 3,680 Closing basis Targets Rs 3,880-3,920.

Source: investing.com, nseindia.com

Disclaimer: Views in the report are author’s personal view and need not guarantee any kind of profits. Investor should take advice from financial advisor before investing. Investment in commodities markets is subject to market risks.

(Manoj Kumar Jain is Director of Commodity and Currency at IndiaNivesh Commodities. He has 20 years of experience in financial service sector. Views expressed in this article are author’s own and do not represent those of ETMarkets.com. Readers are advised to consult their financial advisers before taking any position based on these observations.)