Are Soybeans Becoming Jaded to Trade Headlines?
Jun 05, 2018
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.
With a lack of any threatening weather forecast in the short term the soybean market has been fixated on news headlines, specifically news headlines related to ongoing trade spats with China, Mexico, Canada and the EU. With the seemingly every day on again off again trade war rhetoric soybeans have been choppy to say the least. While there is certainly a substantial potential impact on the soybean market if/when tariffs are imposed on the US should we keep reacting to all of the noise?
To recap... In March the White House announced that the US would be intending to put tariffs in place on Chinese goods, then they announced more proposed tariffs on China. On April 4th China responded by announcing proposed tariffs of its own and soybeans were on the list. This sent soybeans sharply lower, at one point down 53 cents. Then on May 21st the US and China announced that good discussions led to postponing the tariffs and that China would seek a way to narrow the trade gap up to $200 Billion. The soybeans gapped higher on the Sunday night open and rallied almost 50 cents in the next week. Then the following week the White House announced that it was going forward with planning tariffs and china said they were disappointed.
Sign up for our Morning Ag Hedge newsletter! Sign up here:http://www.zaner.com/landing/ag_hedge_newsletter.asp
This brings us to June. We have had the Chinese trade delegation in the US and we have sent a delegation to China. In the meantime the White House announced tariffs on steel and aluminum on Mexico, Canada and the EU. Mexico responded with tariffs on Pork legs (and other goods) which went into effect on June 5th. So, the US is now fighting a trade war on at least 4 fronts with a G7 meeting coming up that seems will be squarely focused on trade.
Interestingly, on June 6th China said that they would buy nearly $70 Billion of US agricultural and energies products in the first year of an agreement as a measure to help close the trade gap. However, the soybean market did not have a profound reaction to this news. The offer was contingent on the US dropping pursuits of any tariffs which of course is a big "if". So now we are waiting for the White House response to the offer.
What I'm wondering is if the trade will start to become jaded to the constant trade war headlines until something actually goes into place (like pork legs to Mexico). Similar to the SARS scares of the past. Or global Bird Flu, or Mad Cow... etc. At some point weather might give us something more interesting to talk about. Until then I guess I'll keep one eye on the TV business news channels.
They're here! We have complimentary 2018 commodity reference calendars available. They are a little bigger than pocket sized and very useful if you follow markets. You can sign up for yours here -http://www.zaner.com/offers/calendar.asp(Shipping to the US only)
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.Find me on twitter - @thetedspread
July Soybeans 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 firstname.lastname@example.org
Additional charts, studies, and more of my commentary can be found at:http://markethead.com/2.0/free_trial.asp?ap=tseifrie
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.