Commentary
November 21 beans gained on old crop July and August Soybeans today as new crop Nov 21 gained 15 cents on July 21 and 9 cents against August. Once November beans took out 13.11 to go positive for the year, the market has finally surpassed the 5 percent threshold at 1376. settling today at 1382.6. Ten percent higher on the year is up at 14.42. I attached a chart of November 21 versus November 22 beans, (ZSX21/ZSX22). This spread has rallied from 77 cents Nov 21 over to todays settle at 1.32 over. Its my view that this spread can push to 1.53 Nov 21 over and perhaps near 1.60 over before it eases back.That said if Im growing beans this summer Im watching any weakness in this spread for hedge opportunities. A few reasons to be short thsi spread in the future come on a few fronts. First, the planted acreage from the March 31st planting intentions report remains too low at 87.6 million acres in my view. I see it revised higher between 89 and 90 million acres. Second the ASF issue in China could have USDA curtailing their new crop demand estimate into China, which could increase futures ending stocks. Third and most important most likely will be weather for US growing season. Its the biggest pricing influence in grains. Given the current tightnesss in spot contracts that have traded to major inversions versus deferred contracts, it presents the possibility we might not see any major weakness or a severe retracement in new crop until the second half of 2021.That assumes a normal growing season and no major weather hiccups. In my view the rally now is presenting some favorable hedge opportuntiy for the producer later in 2021 in my opinion.
Trade Ideas
Futures-N/A
Options-N/A
Risk/Reward
Futures-N/A
Options-N/A
Please join me for a free Grain and Livestock webinar every Thursday at 3pm Central. 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.