Soybeans Roadmap Recap for 2015

 As the year's end approaches, we are reviewing our initial soybean cycle analysis and roadmap for 2015. We present here a recapitulation of the cycles presented at the beginning of the year and how they impacted prices, including Gann's 45yrs, 20yrs and 14yrs harmonics. Our 2015 roadmap is updated to compare our initial projection with actual market behavior.

 Cycle analysis review

 Figure 1 is a daily price-time chart for cash soybeans at Central Illinois. The chart includes Gann's 45yrs major cycle harmonics (red and magenta) aligning with November 2014 and 2015 top and bottom, respectively.

 Gann's 20yrs cycle harmonics (green, blue and gray) defined every major turn in the market during this year. At the beginning of the year we were unsure when the rally into the July top was going to begin. As shown in Figure 1, Gann's 20yrs cycle harmonic turning at the end of May early-June aligned with it.

Figure 1
Daily cash prices for soybeans at Central Illinois for 2015. Gann's 45yrs (red,magenta) 20yrs (green,blue,gray) and 14yrs (black) cycle harmonics impacting prices during 2015.

 The July top, which was the high for the year, and the final bottom in September also aligned with other harmonics of this Gann cycle. Our initial though was that September could mark a secondary top from where prices would continue to decline into October-November bottoms. However, the market declined from July until September, aligning with this cycle harmonic.

 Gann's 14yrs cycle harmonics (black) didn't have a major impact this year. A small secondary top at the beginning of May and secondary top on late October aligned with it. Since October is the most important month for bottoms in the soybean market, our initial assumption was that Gann's 14ys cycle harmonic due for October 2015 would align with a bottom, creating a double bottom formation with Gann's 45yrs harmonic turning up in late November.

 Roadmap review

 Figure 2 is an updated drawing of our initial soybean 2015 roadmap. This figure includes the original roadmap presented in January (black) together with an updated version (gray-dash.)

 As mentioned above, there were smaller cycles turning in the earlier part of the year, hence we were not sure when the rally into the final summer top would begin. Finally, Gann's 20yrs cycle aligned with this bottom on late May - early June 2015.

Figure 2
Soybeans roadmap for 2015. Original roadmap presented in January (black) and update according to actual market behavior (gray-dash)

 The original roadmap shows that we believed September could align with a secondary top. Instead, on that date the market made a final bottom for the year. This created a 2 months bear market from early July until late September.

 Similarly, since soybeans generally bottoms in October, we believed that Gann's 14yrs cycle would align with a bottom on late October. This is shown in the original roadmap as a double bottom formation against November. However, this cycle harmonic had little impact on prices and only aligned with a secondary top declining prices until late November 2015.

 Summary

 It is useful to review our initial cycle projections and roadmap to compare them to actual market behavior. This review lets us understand where our analysis was spot on and where it was not accurate enough.

 Even though our cycle turn dates where accurate, for the month of September and October, the market behaved differently as we initially thought it would.

 Soybean Market Cycle Analysis and Roadmap for 2016

 Ricardo Da Costa

 Grain Market Analysis