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NOVEMBER SOYBEANS

I am looking to get long the SOYBEAN market.

I will turn to the mini-contract which is 1/5 the contract size of the regular. This will allow us to build a position should we choose to add additional contracts as the trade progresses.

We have seen a retracement in the past 3 trading sessions of $1.55 (from a high of $16.91 on Sunday evening to a low of $15.36 during Wednesday’s trading session)

My colleague, John Payne, who writes a newsletter “This Week In Grains” made an interesting point:

“I believe beans have the most bullish fundamental set up right now. If demand stays constant, there is a real possibility we see beans at somewhere close to 20.00 before the harvest. Beans are usually made the last week in July/early August. If we get another round of crop progress reductions, then buying on dips would be recommended, as there isn’t much time for the progress to get there”

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What is important to consider is what has changed We still haven’t received any rain worth getting excited about. Also, Monday’s Crop Progress report showed continued damage to the existing crop.

This represents a 4% reduction in the good to excellent and a 5 % increase in poor to very poor. This is a very important time for soybeans as we enter the pod setting stage. With little to no moisture, things could get pretty bleak.

We have seen reports of an easing of temperature and possible rain in the forecast, but I believe the small levels that are expected will not be enough.

I like to be LONG soybeans but I don’t think it is necessary to put too much risk out there, so I choose the mini-contract. I look for this 1590’0 level to hold while risking 55 cents, and I think we will see a re-test of the 1660’0 level in the near future as we make another run to 1700’0.

BUYING the November mini-soybean contract at 1590.0 (GTC)…last trade 1603’0

• Risk will be the 1535’0 level ($550.00)
• Objective will be the 1700’0 level $1,100.00

(Initial margin for the mini-contract is $1,012.00)

Have a look: