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Commentary
Beans continue to chop around the 10.00-10.20 level. Lack of conviction in both directions currently. We closed 2024 at 10.10. So even with all the noise the last two months, we are essentially flat on the year. This should change in my view as we enter into Spring. I think the market over time could leg higher, but a retest of the Dec lows may happen as tariffs provide the Algos with headline pressure. Funds are now short beans (22K), soymeal (61K), and bean oil (27K). That may pressure near term if funds can’t get a reason to buy outside of some end of month and quarter short covering. The corn/bean relationship still favors planting corn and, in my view, has led to a dip in soybean acres to 85.0 million acres. The whisper number among the trade is acres at 84 million. The Ag Forum stated at the end of February that with normal weather and a yield of 52.0 bu./acre puts production at 4.375 billion bushels, the most since 2021-22. Crush keeps rising, offsetting lower exports, which is expected amid the trade conflict with top world importer China. Ending stocks would edge up to 400 million bushels, implying a comfortable stocks-to-use. However, I view the weather as anything but normal anymore with dryness in the west offsetting a wet eastern belt. With a loss in acres, is it wise to bet beans higher? I think if one does, get long beans and meal using Dec soymeal and January soybeans. Those are the unknowns and, in my view, would offer greater upside longer term than old crop contracts. Funds love trading beans from the long side, with hot dry weather the obvious trigger. Trade idea in soymeal below. That’s the largest short in the complex.
Trade Ideas
Futures-N/A
Options-Buy the December 2025 Soymeal 350 call. Sell the December Soymeal 400 call. Pay 5 points or $500 plus all commissions and fees.
Risk/Reward
Futures-N/A
Options-the risk is the price paid ($500) plus commissions and fees. Maximum value at options expiration (11/21/25) if both strikes finish in the money is 5K, minus trade costs and fees.
Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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