Click here to read the re-introduction of the BIS Speculative Newsletter
Click here to return to BIS Speculative Newsletter Home Page
Our interest in short soybeans is a combination of recent price action, technical resistance and trade risk.
- November futures are currently 68¢ above their April low…decent rally.
- Trendline resistance has halted futures prices advances in a logical spot.
- Potential trade disruptions would impact new crop far more than old.
- The projected massive acreage drop may be less than anticipated. This is not a guess or a statement we believe it is, just that it could be, and that would greatly impact the new crop balance sheet.
Forecasting the price of soybeans is extremely difficult, more so than corn for sure. We’ve often shown the stocks-to-use vs. price for corn and the reliability of that makes it useful. For soybeans as illustrated below…we could guarantee a stocks-to-use of 5%, and know the price will probably fall between $9 and $14. Great.
Bottom line is beans are subject to do just about anything, so inexpensive options during a key part of the US growing season are quite attractive, and should certainly be considered for the producer as a price protection tool as well.
Consider the August short dated new crop options if you want protection through the June acreage report, though the cost is considerably higher. We will likely look at the August options as that report approaches.
Short New Crop Soybeans
Entry: Buy two (2): 1030 July Short Dated New Crop Soybean Puts. Currently cost ~11.5¢.
Alternative Strategies: Short futures and exit on a close over $10.65.
Target: $975 is certainly in the cards.
Risk Exit: None, risk is price paid for the options.
Graphic:
Click here to return to BIS Speculative Newsletter Home Page
Disclaimer: The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Brock Investor Services, Inc believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice is based on the opinion of Brock Investor Services, Inc and reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. There is a risk of losses as well as profits when trading futures and options. This brief statement does not disclose all the risk aspects of derivative trading, therefore careful study carrying FCM’s Risk Disclosure is strongly encouraged before the recipient of this email trades.