Soybean export sales came in at only 420 thousand metric tons. China was absent from the buyers list, maybe because there was an unknown purchase of 112K which is too small to mention. Due to the drought in Malaysia and Indonesia cutting palm oil production sharply, we have created a fear that soy oil will be needed to replace its needs. Last week’s planted acreage report had everyone saying it is not what you plant but what you grow. Under normal weather conditions, the numbers suggested for planting are accepted and traders begin to watch weather and its impact on yields. But this year is different because of the record rains in March in the Southern Delta and too much rain in the Midwest. It is common thinking that we will plant less corn and more beans, the original numbers might change. Note: 1 million acres or more planted and 3% yield decline pushes ending stocks to 460 million bushels. If acres are up 1 million and a 3% yield increase occurs, ending stocks may push 700 million bushels. Once we have determined what acres will be planted in actuality in the next 30 days then traders will use weather and its impact on yield potential for 90 percent of their pricing influence.
Using recent rallies already this week that have taken soybeans up and through support levels I would look for some topping action in the soy complex as the market has reached some overbought levels on the RSI and MACD. I would look at buying the July Soybean 9.00 put for a purchase price of 7 cents, or in cash value $350.00. The risk on the trade is the purchase price and all commissions and fees.
For those interested in grains, Walsh Trading’s Senior Grain analyst Tim Hannagan hosts a free grain webinar each Thursday at 3:00 PM central time. Tim has been ranked the #1 grain analyst in the United States per Reuters and Bloomberg for his most accurate price predictions for soybeans and corn in the years 2011 and 2012. Link for next week’s webinar is below. If you cannot attend live, a recording will be sent to your email upon signup. Or please contact me at anytime or firstname.lastname@example.org
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.