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.
One of the mostnegative aspects of the soybean market the last few months has been exports. More specifically the lack of exports to keep us on pace to hit the USDA's target. On the January WASDE report the USDA finally acknowledged the elephant in the room and lowered their export projection. But, with the US$ index under pressure could the soybeans pull off some better export business after all?
Going into the January USDA report soybean exports were running roughly 177 million bushels behind the pace of last year. However, the USDA was still projecting a 2% increase in exports year over year. On the January report they lowered export expectations by 65 million bushels, now 90 million off of their original projection. So, most feel that this is a step in the right direction, but that export estimates will have to continue to come down and soybean stocks will continue to rise.
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The reasons for this are a little unclear. This is the time of the marketing year where the US usually enjoys the bulk of global exports as South America is at the tail end of their stocks from the previous year and before their new crop is harvested. This year however global importers have been willing to pay more for the South American product. Lower soybean oil yield and protein content in the US crop could be a big reason why. However, the US$ has been under pressure recently while the Brazilian Real has been relatively strong. This could create a currency advantage that could make US exports more attractive again if the US$ continues to go lower.
In mid 2017 the US$ fell to it's lowest levels in almost 3 years, but was able to recover back to 95.00 within a few months. Last week the US$ broke the mid summer low and pushed to it's lowest level in almost 3 years. On Wednesday the US$ index fell below the 90.00 mark for the first time since early 2015. Now there is not much technical support until we get back to the 85.00 - 78.00 range that was traded in 2012-2014.
If the US$ continues to fall under pressure and the Brazilian Real continues to stay relatively strong this could bring global end users back to US soybeans despite the lower quality. But questions remain... Such as - How much of a currency advantage is needed to make US beans more attractive? Is there time to play catch up for the current marketing year? Will the FED step in to support the US$ at some point. For now soybean exports continue to struggle, but some help may be on the horizon. The question is if it is too little too late.
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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.
March Corn Daily chart:
MarchSoybeans 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 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
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.