Commodity Calls

Outlook is bullish for NCDEX soyabean

Gurumurthy K | Updated on January 09, 2018

Soyabean prices have seen a strong upsurge over the last couple of weeks. Before this up-move, the prices had been on a strong downtrend since September. The Centre’s move to increase the import duty on edible oils helped halt the downtrend and in triggering a trend reversal.

The soyabean futures contract on the National Commodity and Derivatives Exchange (NCDEX) reversed sharply higher in the last two weeks after hitting a low of ₹2,767 per quintal on November 20. The contract has surged over 10 per cent in the last two weeks to reach the current level of ₹3,061.


The recent rally, which has taken the contract above the ₹3,000 psychological mark, keeps the outlook bullish. Immediate support is at ₹2,975 — the 100-day moving average which has been limiting the downside for more than a week now. The next key support is at ₹2,950 — the 55-week moving average. Dips to these supports may find fresh buyers coming into the market.

The 21-day moving average is also on the verge of crossing over the 200- and 55-day moving averages. This is a bullish signal, which indicates that the downside could be limited even if the contract breaks below ₹2,950 in the near-term. A rally to ₹3,120 is likely in the coming days. Inability to break above ₹3,120 can trigger a corrective fall to ₹3,050. But if the contract breaches above ₹3,120, the rally can extend to ₹3,280 or ₹3,300 in the coming weeks.

Traders with a medium-term perspective and high-risk appetite can make use of dips to go long at ₹3,000. Stop-loss can be placed at ₹2,910 for a target of ₹3,250. Revise the stop-loss higher to ₹3,075 as soon as the contract moves up to ₹3,100.

The outlook will turn negative only if the contract breaks below ₹2,900 decisively. Such a break will increase the likelihood of the contract falling to ₹2,800 and ₹2,750 again. However, the probability of such a strong fall appears low at the moment.

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

Published on December 05, 2017

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