Commentary
In my opinion, should beans continue their ascent, we could see them touch near $18.00 per the chart attached. It is my belief they could trade a lot higher than 18.00, but I’m not sure anybody knows what we are seeing here. However, if July soybeans trades back underneath $17.00, we could see a deeper correction.
The rally higher in July beans from 16.67 to a new contract high today at 17.44 maybe telling us something. Cash news t had Brazil’s soybean basis up 7 cents per bushel today. US values backed off 4 to 7 cents at the center gulf. The delivery calculations per some in the cash trade still strongly supports the current inverse in the July22/August 22 soybean spread. There is noise in the trade that it is probably worth inverting more in my opinion. I had a few people asking what happened to bean oil today in regards to the weakness seen there. The best explanation I can give is that Indonesia is now introducing more exemptions and complications to its export policy for Palm oil. July 22 bean oil futures fell a sharp 170 points from the prior day high and in my view if they can’t hold the 79.00 handle, we could drift to 76.00. Consider the following trade into next week given the higher highs and higher lows made on the charts.
Trade Idea
Futures-N/A
Options- Sell the July 22 soybean 19.00/18.00 put spread for 88 cents OB.
Risk/Reward
Futures-N/A
Options- The risk on the trade is approximately 12 cents or $600 plus commissions and fees. The market would have to go and close above 19.00 to keep the whole collection of 88 cents. That is not my intent here to see if that happens, buy what I think could happen Is that if the market rallies, we could potentially have the opportunity to buy back the spread 20 to 30 cents cheaper than we bought it. That would be the plan. Please call me at your convenience.
Please join me next Friday June 4th at 2pm central time for a free grain and livestock webinar. We discuss supply, demand, weather, and the charts. Sign Up Now
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.
Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
312 957 8103
888 391 7894 toll free
312 256 0109 fax
Walsh Trading
53 W Jackson Suite 750
Chicago, Il 60604