TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS ANDMAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
Soybean futures were under significant pressure in the night session going into Thursday's trade. Before the pit open export sales came out which were good for old crop soybeans and soybeanoil, but once again disappointing for new crop soybeans. Overnight the NOAA also released their new 3-month long term forecast which is looking for normal precipitation through August. To add to the negative tone of the day the FED minutes released yesterday afternoon had almost all commodities leaning lower... Except Soybean meal.
Just before 11:00 AM on Thursday morning November soybeans were making new lows down 24 cents on the day. Poor new crop export sales and a less threatening weather outlook from NOAA set a negative tone for soybeans this morning, but maybe the more important news came from yesterdays afternoon's Fed minutes. The language the Fed is using is suggesting a high probability of a rate hikeat the next Fed meeting. The thought of alikely rate hike sent the US$ index sharply higher and most commodities lower as funds moved away from their inflationary bets.By the end of the day soybeans had recovered all but about 5 cents of losses closing almost 19 cents off of lows. Front month July soybean meal was able to pull the soybean complex up by the bootstraps and erase what was looking like a nasty day.
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Soybean meal started the day slightly higher despite significant pressure in soybeans and soybean oil. Meal did actually go lower on the day for some time mid-session, but by the noon hour soybean meal came roaring back to close up over $4 on the day. This set a new high and a new high close for the year and represents the highest values that front month soybean meal has traded since December of 2014.
I have talked at length in the last few months about how a slowdown in the crush had left the door open for a rally in soybean meal and an improvement in crush margins. Two months ago the crush margin had gotten down to a multi-year low and the soybean crush had slowed dramatically. In the last month and a half soybean meal has rallied sharply and crush margins have gone through the roof. It is now a matter of time before meal stocks begin to build significantly and the strength in soybean meal could start to fall away. Cash basis at the gulf has already started to weaken suggesting the meal stocks are building. However, as today's trade proved, soybean meal may not be done with this rally just yet as speculators and technical traders ride the wave of this bull market.
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Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action. Ted Seifried - (312) 277-0113. Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.Follow me on twitter @thetedspread if you like.
JulyCorn Daily chart:
JulySoybeans Daily chart:
Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!
Ted Seifried (312) 277-0113 or email@example.com
Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie
Futures, options and forex trading is speculative in nature and involves substantial risk of loss. This commentary should be conveyed as a solicitation for entry into derivitives transactions. All known news and events have already been factored into the price of the underlying commodities discussed. The limited risk characteristic of options refers to long options only; and refers to the amount of the loss, which is defined as premium paid on the option(s) plus commissions.
FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STRIKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR EVEN MOVE IN THE OPPOSITE DIRECTION.