Soybean Breakdown: Tuesday AM Trade Confirms Bearish Breakout

The Tuesday morning session delivered the confirmation the charts were screaming for. Price broke decisively below the critical 200-day moving average at 595.47, a key technical level that had held as support for months. This move wasn't a minor dip; it was a full breakdown that turned the red zones on the daily chart from potential buy areas into active resistance. The breakdown validated the earlier "Strong Sell" signal from daily moving averages, flipping the trend from neutral to bearish.

The acceleration into oversold territory was the next key signal. The move pushed the 14-day RSI to 44.006, a classic setup for a short-term bounce. But in a strong downtrend, oversold readings are often just a pause before the next leg down. This isn't a reversal signal; it's a sign the selling pressure is intense enough to drive the market into extreme territory, which typically precedes further downside before exhaustion sets in.

The bottom line is clear: the Tuesday AM action broke the primary trendline and key moving average, confirming the bearish setup. The oversold RSI suggests a potential relief rally is due, but it's a tactical bounce, not a tactical change. The path of least resistance remains down until price can reclaim and hold above that broken 200-day MA.

Supply Glut Confirms the Sell Signal

The technical breakdown is now backed by a fundamental shift. The USDA's latest report confirms a major supply glut is in place, directly supporting the bearish price action. The key metric is the U.S. ending stocks figure, which jumped to 350 million bushels for the 2025-26 crop year. That's well above the 294 million expected and a significant increase from the 290 million reported last month. This surge in carryover is the fuel for the downtrend.

The math is clear. That 350 million bushel pile pushes the stocks-to-use ratio to 8.2%. Compare that to last year's tight 7.4% ratio, and you see a dramatic loosening of supply conditions. When the market has ample inventory to meet demand, it removes a key bullish driver. This isn't just a U.S. story. World production estimates for 2025-26 are up sharply to 425.68 million metric tons, adding to global glut concerns. The report itself notes the outlook is bearish, with carryout significantly above expectations.

For traders, this data removes any doubt about the trend. The oversold RSI reading after the breakdown isn't a sign of imminent reversal; it's a symptom of the market digesting this new reality of abundant supply. The path of least resistance is down because the fundamental supply-demand balance has broken decisively to the downside. The sell signal is now confirmed on both the chart and the balance sheet.

Catalysts and Risks: What to Watch Next

The setup is clear. The breakdown below the 200-day MA has flipped the trend, and the oversold RSI suggests a bounce is likely. But the path of least resistance is down. Traders need to watch two key areas: the immediate technical battleground and the fundamental catalysts that could break the current pattern.

On the chart, the immediate resistance is the broken 200-day moving average at 595.47. Any rally to reclaim this level will be tested by sellers. A failure here confirms the downtrend remains intact. The next major support is the 2024 low, which tests the 2023-2024 trading range. That's the next target for a breakdown. Watch volume on any bounce; weak volume would signal lack of conviction, making a reversal less likely.

The primary risk to this bearish thesis is a supply disruption. Weather events in South America or logistical snags could tighten the global supply picture, which is already showing signs of strain with the 350 million bushel ending stocks figure. A sudden surge in Chinese demand would also act as a shock absorber for the glut. These are the fundamental events that could reverse the technical sell signal. For now, the technicals and fundamentals are aligned for downside. The market is pricing in abundant supply, and the chart action confirms it. Watch for any break above the 200-day MA to signal a tactical shift, but until then, the focus stays on the downside targets.