Soybeans 2014 Fall Seasonal Low

 As mentioned in a previous post, we clearly underestimated this year's May top. The decline that followed this top has been incredible. At the time of this writing prices have declined more than 40% from the May 2014 top and broke below $10 per bushel getting close to 2009 price levels.

 Seasonal behavior indicates that after a May top prices will most likely decline all the way into October seasonal lows. Additionally there is a harmonic of Gann's 30 years cycle due to turn on late September thru early October. This coincides with soybeans seasonal behavior.

Cash soybeans seasonal and cycle analysis

 Figure 1 depicts soybeans typical seasonal behavior. One of the most relevant features of the soybean market are its October seasonal lows. A quick review of past market data will reveal that almost every year the market rallies, at least temporarily, on the month of October.

Figure 1
Cash soybean market seasonal trend

 Additionally, several important market bottoms have taken place in this month. Regarding the soybean market, B. Cowan states that a simple rule of thumb is that the analyst or trader should be on the short side of the market between August until October.

 Further study of soybeans seasonal behavior indicates that after a May top prices will most likely decline for 5 months until the seasonal lows of October.

 This year a harmonic of Gann's 30 years is due to turn between late September and early October. This cycle harmonic could align with a market low.

 Figure 2 is a daily price-time chart for cash soybeans at central Illinois. It shows the harmonic of Gann's 45 years cycle due to turn in Nov-2014 (red) and the Gann's 30 years cycle harmonic just discussed (pink). This harmonic of Gann's 30 years cycle has aligned with several important turning points, including the much anticipated mid-2013 top as forecasted by Cowan in his writings.

Figure 2
Daily cash prices for soybeans at central Illinois from 2008 to 2014. Harmonics of Gann's 45yrs and 30yrs cycles.

  The next important cycle harmonic is the already discussed Gann's 45 years cycle. This cycle turn date was presented in our 2014 soybean roadmap. Together with this cycle, harmonics of Gann's 20 years and 14 years are due to turn in the month of November.

 At this moment it is unclear if this cycle will align with a market top or bottom. Nevertheless, the last few years have seen important November turning points as bottoms. The reader may want to review the bottoms of 2010, 2011, 2012 and 2013 all taking place in this month.

 Summary

 A harmonic of Gann's 30 years cycle is due to turn between late September and early October. This coincides with the typical soybean market seasonal bottoms in the month of October. It is possible then that the market will rally, at least temporarily.

 A much anticipated cycle turn window for November is also mentioned. However, at this moment it is unclear if November will align with a major bottom or if on the contrary we will see yet another top taking prices even lower.

Update: Soybeans 2014 Fall Seasonal Low  

Ricardo Da Costa

Grain Market Analysis