Soybean Market Cycle Analysis and Roadmap for 2017

 Using Gann's and Brad Cowan's cycle theory we analyzed the soybean market for the year 2017. Significant cycles are expected to turn during this year. The turn dates for these cycles are presented in this post together with a roadmap showing the possible market action during the year.

 Gann's 84 years cycle

 In last year's soybean roadmap we discussed Gann's 84yrs cycle harmonic expected to turn during the middle part of the year. However, depending on the initial point in time used to calculate this harmonic the turning date could change from August 2016 to January 2017.

Figure 1
Daily cash prices for soybeans at central Illinois from 2016 to 2017. Harmonics of Gann's 84yrs (red), 20yrs (green), 14yrs (magenta, blue and gray) and 45yrs (black).

 We are including again this cycle harmonic in the current roadmap. As mentioned in our previous 2016 roadmap, Cowan predicted that this cycle would turn 84 years after the major 1932 bottom. In this case, more specifically 16 years after the major 2001 bottom. Figure 1 is a daily price-time chart for cash soybeans from 2016 to 2017. It shows several cycles, including Gann's 84yrs cycle harmonic (red) due to turn in January 2017.

 Gann's 20 years and 14 years cycles

 Harmonics of these cycles shape the market every year and we are sure 2017 will be no exception. There is an important Gann's 20yrs cycle harmonic turning in July (green.) Also, harmonics of Gann's 14yrs cycle are due to turn during the middle and later part of the year (magenta, blue and gray.)

 Gann's 20 years cycle

 There is an important harmonic of this cycle due to turn around early July 2017 (green). This is the best month for soybean to reach top prices according to its yearly seasonal behavior. For this reason our initial assumption is that prices will rally for about 5 to 6 months, from January to July.

Gann's 14 years cycle

 Another important cycle projected for the year 2017 is an harmonic of Gann's 14yrs cycle (magenta) expected to turn around late May early June. These months are also important for soybean tops but also but acceleration bottoms leading to final tops.

 As mentioned, this is an important harmonic hence we are expecting either a double top formation between May-July or an acceleration bottom aligning with this cycle ending with a July top.

 Another less important harmonics of Gann's 14yrs cycle are expected for September (blue) and October (gray) 2017. After a July top, September is a good month for a secondary top. October is the best month for soybean bottoms according to seasonality.

 Gann's 45 years cycle

 A very important harmonic of Gann's 45yrs cycle is expected to bottom in January 2018 (black). It's included in this roadmap because of its importance. This is the same harmonic that topped on November 2014.

 Soybeans Roadmap for 2017

 Figure 2 presents a possible scenario for soybean price action during 2017. As with previous roadmaps, it's just a visual representation to keep as a reference and guide during the whole year. It focuses on the timing related to both seasonal behavior and the cycles mentioned above.

Figure 2
Soybean roadmap for 2017. Suggestion of a possible price scenario and turn dates during 2017.

 In this particular year, our initial assumption is that the market will resume its way up during January 2017 and rally until a final top in July 2017. From there the market should bottom in October making another, more important bottom in January 2018.

 Summary

 We have presented here a soybean cycle analysis and roadmap for the year 2017.

 As mentioned above, our analysis indicates the possibility that prices will rally from January to July 2017. After a final July top prices should decline until October followed by another bottom in January 2018.

Next post: Soybeans - February 2017

 Ricardo Da Costa

 Grain Market Analysis