Soyabean price has been tumbling since the second week of May. The soyabean futures contract traded on the National Commodity and Derivatives Exchange (NCDEX) recorded a high of ₹4,412 per quintal on May 8 and then tanked about 19 per cent from there. Soyameal exports are falling to record lows dragging the prices of the bean. The latest data from the Solvent Extractors’ Association of India (SEA) show that soyameal exports tumbled about 22 per cent in May to 14,046 tonnes from 18,017 the month earlier. Unless a revival in the meal exports is seen, the soyabean prices are expected to hover at lower levels going forward.

The NCDEX soyabean futures contract recorded a low of ₹3,454 last week on June 23. The contract had remained range bound for a few days near this low and has risen sharply on Monday. The price action on the chart is suggesting that a corrective rally is possible in the short-term within the overall downtrend. Traders with a short-term perspective can use this opportunity to go long in this contract.

Short-term view: The downtrend that had begun in early May has found a temporary bottom last week. The contract has formed a base in the ₹3,500-3,450 range. The level of ₹3,450 looks to be a strong support as both the 200-day moving average as well as a trend-line is poised around this level. So, further fall in the contract is possible only if this support level is broken. But an immediate break of the support level ₹3,450 looks unlikely as the contract has managed to reverse higher from the low of ₹3,454 now.

The next key resistances are at ₹3,743 – the 21-day moving average and ₹3,820 – the 38.2 per cent Fibonacci retracement level. A corrective rally to test these resistances looks likely in the short-term. Traders can go long with a stop-loss at ₹3,425 for the target of ₹3,730. Intermediate dips to ₹3,500 and ₹3,475 can be used to accumulate long positions.

The outlook will turn bearish only if the contract records a strong break and close below ₹3,450. The ensuing targets on such a break will be ₹3,375 and ₹3,330.

Medium-term view: The medium-term downtrend will remain intact as long as the contract remains below the trend-line resistance at ₹3,850. The key support level to watch is at ₹3,300. A strong break below this level will increase the danger of the downtrend extending further to ₹3,000 over the medium-term.

Only a strong break and a decisive weekly close above ₹3,850 will signal a trend reversal. Such a break can turn the outlook bullish and open doors for a rally to ₹4,000 and ₹4,200.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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