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Commentary
I’m looking for cheap plays that are low risk and high reward in the soy sector. While I would rather be early with a strategy than late, the month of May was painful if one was long the grain market. Perhaps rightfully so. While the long-range forecast models have for the most part been calling for high pressure to build over the Midwest this summer, which translates to hot and dry for the large Midwest production areas, we have seen up to this point anything but. Instead, it has been cool and wet for most. When the precipitation has dissipated, producers have had ample time to get the crop planted. USDA reports that 93% of the nation’s corn crop was planted as of June 1, along with 84% of the soybean crop. That matches the five-year average for the week for corn progress, while soybeans are going in 4 points faster than the average.
I’m looking at the November 2025/26 bean spread as a potential opportunity. There is a gap on the chart approximately 7 cents higher from today’s close at 12 cents November 25 under, but longer term I think this spread on a potential weather premium rally can easily trade back to unchanged or even money. Should new crop November soybeans trade back to their recent highs at 10.70, I think this spread trades back to parity in my opinion. I’m not going to lay out a specific price to entry here, but I think that the spread has a good chance to be a successful trade. IF one can buy between 25 to 20 cents (November 2025) under is a good entry level in my opinion. Place a GTC stop at your convenience. I would risk 7 cents ($350) plus all commissions and fees from entry on a GTC basis. I think this spread trades eventually to an inversion, where November 25 trades over Nov 26.
Trade Ideas
Futures-Buy the Nov 25/26 soybean futures spread at 22 cents July 2025 under.
Options-N/A
Risk/Reward
Futures-If filled at -22 cents on the spread, risk 7 cents from entry of $350 plus trade costs and fees. Place an offer to exit at 23 cents July 25 over for a gain of 45 cents less commissions and fees.
Options-N/A
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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