Update: Soybean and Wheat Markets February 2014

A short review of the soybean and wheat markets with an update of previous forecasts.

 

Soybean Market Review

The soybean market roadmap for 2014 showed how a harmonic of Gann's 14 years cycle was due to bottom in early January. The last update on the soybean market adjusted a Gann's 20 years cycle harmonic turning point date for Jan 24th. The market did not behave exactly as expected making a slightly lower bottom on Jan 30th at 1260c, an error of only 0.30% of the velocity price projection at 1256 1/4c. However, March soybeans has rallied since.

Figure 1 shows an updated daily price-time chart of March soybeans with a momentum curve. It is clear that 1-day, 3-day and 5-day momentum curves diverged against market action on the Jan 30th bottom, showing that the market was in position to rally.

Figure 1
Daily prices for March soybean futures from 2013 to 2014 and momentum curves. Divergence between price and momentum indicator suggesting a market rally

The market is still in a sideways pattern. Nevertheless, the bottom of Nov 5th 2013 is still considered as a final bottom because of the harmonic of Gann's 45 years cycle and the completion of the underlying geometric structure at that point. The third section of this update will comment on a possible contradictory scenario for the present time.

Wheat Market Review

The early 2014 cycle analysis for the wheat market presented a major harmonic of the 20 years cycle due for February 2014. This cycle, mentioned by W.D. Gann, is a harmonic that goes back almost 120 years into the past. If this cycle aligns with a market bottom, it could mean the beginning of a strong rally or a bull market.

Early to mid February 2014 was presented as a possible turning point date, based on more recent market action aligning with smaller harmonics of this cycle. A price projection was presented, mentioning that the March contract could reach 516c per bushel around mid-February.

However, the market rallied with strength on Jan 30th. The price and PTVs lengths projections have not been reached.

The following section of this update will mention how two different cycles are impacting the soybean and wheat market in February 2014.

February Cycles for Soybean and Wheat

The same soybean cycles that aligned with the top-bottom formations in 1977-1978, the multiple bottoms in 1986-1987, the multiple tops in 1996-1997, multiple bottoms in 2004-2005 had cycle turn dates for 2013-2014. It was projected to see a multiple top formation between May-Jun 2013, July 2013 and Jan-Feb 2014.

As expected, the market made a double top in June and July 2013 followed by a decline, yet the magnitude of these tops was not as important as anticipated. The last one of these cycles has a window of tolerance for January and February 2014. It was expected as a market top. However, the market bottom of November 2013 is regarded as important, but the market has remained in a sideways motion since it turned up.

We anticipate higher prices, but it still remains to see if the February cycle will invert and align with a secondary higher bottom, or if the market will top and continue its decline.

Now, the wheat market cycle for early 2014 is anchored at the major bottom of January 1895 at 49c. As mentioned, recent harmonics of this cycle project a turning point for February 2014, but the cycle could very well deviate and have a turning point window from January to March 2014.

Just as with the soybean market, we anticipate higher prices, meaning that it is expected that this cycle aligns with a market bottom. However, keeping in mind the soybean cycles and their possible behavior, there is the possibility that the cycle will aligning with a top and that prices will continue to decline. We do not anticipate this, but it is an scenario to consider.

Update: February 2014 and a 9 Years Cycle in Cash Soybeans 
Update: March 2014 Wheat Market Cycle Analysis 

Nadiel Outis

Grain Market Analysis