How will Soybeans Act at $10?
Jul 06, 2017
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.
Soybeans have rallied almost 80 cents since last Thursday and have posted new highs over the last 4 months. The condition of the soybean crop has declined in both of the last two crop progress reports and is becoming a concern. As November beans approach the key $10.00 mark the question is where do they go from here?
An 80 cent rally in the soybean market is impressive in a year where we planted a record amount of soybean acres. The record acres do give a healthy cushion to this soybean crop but after a soggy planting season followed by a warmer dryer pattern in some areas have raised concerns about the condition of this soybean crop. While I will argue that it is too early to begin to make yield estimates at this point in the year soybeans may have an uphill battle to trendline yield.
In the last two weeks soybean conditions have declined from 67% good to excellent to 66% to now 64%. This compares to 70% good to excellent last year. While the conditions are not terrible the declining trend is troubling especially for South Dakota at 23% poor to very poor, North Dakota at 17% poor to very poor, and Indiana at 13% poor to very poor. These are large growing areas for soybeans that may continue to see stress unless the weather pattern sees a significant change.
Sign up for our Morning Ag Hedge newsletter! Sign up here: http://www.zaner.com/landing/ag_hedge_newsletter.asp
Weather and conditionswill have to be watched closely going forward. In most years soybeans make it back to best their February average price which this year is just shy of $10.20. It seems that this may be the opportunity for that to happen, but if it does and then weather turns more normal in the key time frame of late July through early September then this move couldproduce a summer high for soybeans. Producers should be watching and looking for marketingopportunities. There are strategies to keep the upside open which can help producers make sales without risking opportunity.
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.
We have complimentary 2017 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)
DecemberCorn Daily chart:
NovemberSoybeans 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.