Soybean futures hit a 2025 low on 7th April in response to President Trump’s sweeping tariffs. Since then, they have rallied 8.4%, staging a strong rebound.
The first leg of the rally (7–11 April) was driven by front-loaded U.S. exports, a weaker dollar, and Trump pausing tariff hikes on 9th April. Prices moved sideways, buoyed by Argentine supply disruption balancing out favourable U.S. planting weather & a bumper harvest in South America.
Momentum resumed on 12th May after the U.S. & China agreed to a 90-day mutual tariff reduction. The latest WASDE report added fuel, showing tighter supplies & lower ending stocks. The USDA now projects 2025/26 US ending stocks to fall 15.7% YoY to 295 million bushels.
On 14th May, futures reached a nine-month high, lifted by a proposal to extend the biofuel tax credit, which augurs well for stronger demand for soybeans.
TECHNICAL SIGNALS CONFIRM BULLISH FUNDAMENTALS
Soybean futures confirmed a bullish golden cross on 11th April, as the 9-day moving average crossed above the 21-day. The rally gained traction after prices found support at the 21-day average on 9th May, reigniting the strong upward momentum.
MACD shows fading bullish momentum, and RSI has dipped below its 14-day average. However, this consolidation could set the stage for a potential rebound as technical pressure eases.
OPTIONS DATA POINT TO SOFTENING OF BULLISHNESS IN THE NEAR TERM
For the week ending 6th May, Managed Money’s net long positioning in soybean futures fell by 42.8%, reflecting a 6.8% drop in longs and a 10.6% rise in shorts, signalling a weakening bullish sentiment.
Soybean futures and options implied volatility spiked in early April as prices and skew dropped. From 9th April, both price and skew began rising while IV gradually declined. This suggests stabilising sentiment and reduced demand for downside protection in soybeans.
Source: CME CVOL
OI trends over the past week indicate bearish positioning in near-term contracts, marked by an outsized increase in puts. In contrast, longer-dated contracts saw a significant rise in call OI, while put OI declined.
Source: CME QuikStrike
HYPOTHETICAL TRADE SETUP
This paper posits a long position on the CME Micro Soybean July futures (MZSN25, expiring on 20th June) given strong technicals, reduced tariffs, & a bullish WASDE report. The rebound since 7th April, coupled with optimism from U.S.-China trade talks and biofuel tax credit extension, hints at continued upside potential.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
The first leg of the rally (7–11 April) was driven by front-loaded U.S. exports, a weaker dollar, and Trump pausing tariff hikes on 9th April. Prices moved sideways, buoyed by Argentine supply disruption balancing out favourable U.S. planting weather & a bumper harvest in South America.
Momentum resumed on 12th May after the U.S. & China agreed to a 90-day mutual tariff reduction. The latest WASDE report added fuel, showing tighter supplies & lower ending stocks. The USDA now projects 2025/26 US ending stocks to fall 15.7% YoY to 295 million bushels.
On 14th May, futures reached a nine-month high, lifted by a proposal to extend the biofuel tax credit, which augurs well for stronger demand for soybeans.
TECHNICAL SIGNALS CONFIRM BULLISH FUNDAMENTALS
Soybean futures confirmed a bullish golden cross on 11th April, as the 9-day moving average crossed above the 21-day. The rally gained traction after prices found support at the 21-day average on 9th May, reigniting the strong upward momentum.
MACD shows fading bullish momentum, and RSI has dipped below its 14-day average. However, this consolidation could set the stage for a potential rebound as technical pressure eases.
OPTIONS DATA POINT TO SOFTENING OF BULLISHNESS IN THE NEAR TERM
For the week ending 6th May, Managed Money’s net long positioning in soybean futures fell by 42.8%, reflecting a 6.8% drop in longs and a 10.6% rise in shorts, signalling a weakening bullish sentiment.
Soybean futures and options implied volatility spiked in early April as prices and skew dropped. From 9th April, both price and skew began rising while IV gradually declined. This suggests stabilising sentiment and reduced demand for downside protection in soybeans.
Source: CME CVOL
OI trends over the past week indicate bearish positioning in near-term contracts, marked by an outsized increase in puts. In contrast, longer-dated contracts saw a significant rise in call OI, while put OI declined.
Source: CME QuikStrike
HYPOTHETICAL TRADE SETUP
This paper posits a long position on the CME Micro Soybean July futures (MZSN25, expiring on 20th June) given strong technicals, reduced tariffs, & a bullish WASDE report. The rebound since 7th April, coupled with optimism from U.S.-China trade talks and biofuel tax credit extension, hints at continued upside potential.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Full Disclaimer - linktr.ee/mintfinance
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Full Disclaimer - linktr.ee/mintfinance
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.