The Teucrium Soybean Fund (NYSEArca: SOYB) isn’t the first commodities exchange traded product investors think of, but it may be one they should consider as 2021 draws closer.
U.S. soybeans are now competitive in the world markets after the South American harvest and sales season wraps up, especially in Brazil.
Furthermore, Chinese buyers have returned to U.S. farm markets. China has purchased cargoes of soybeans almost every day for the past week or so, renewing hopes for the entire agriculture sector that the world’s largest consumer of soy has returned to U.S. farms for good. Additionally, technicals for grain commodities look appealing.
“What is exciting is that the grains bottomed exactly at 24-year trendline support, which begins from the 1995 top and connects multiple points since then: the 2009/2010 low, the 2014 low, and the 2016, 2017, 2019, and 2020 lows,” writes Andrew Addison for Barron’s. “The more times that a trendline connects prices, the more significant it is.”
Sizing up SOYB
China still needs to restock its stores of grains after the trade war depleted stockpiles. Furthermore, the Chinese government announced that their culled swine herd expanded again for the eighth consecutive month, which confirms that China’s demand for soybeans as animal feed will also continue to grow – the emerging country has drastically cut down its herd in response to the recent African swine flu that swept through the country.
SOYB seeks to have the daily changes in percentage terms of the shares’ NAV reflect the daily changes in percentage terms of a weighted average of the closing settlement prices for three futures contracts for soybeans that are traded on the Chicago Board of Trade. The fund seeks to achieve its investment objective by investing under normal market conditions in Benchmark Component Futures Contracts or, in certain circumstances, in other Soybean Futures Contracts traded on the CBOT or on foreign exchanges.
Recently, “soybeans not only broke out of a two-year base, but they also hurdled an eight-year downtrend. The breakout raises support to the 900/875 area. Dry weather in the Midwest, strong demand from China, and slumping exports from Brazil should be supportive for soybeans,” reports Barron’s.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.