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New podcast is out and it looks like we think soybean oil is heating up. Energy markets are starting to grind higher and June delivery was orderly (unlike May). Wheat is rallying but corn can barely get off the mats. If you want to know what we are following and trading, then make sure you take a listen to this week’s Turner’s Take Podcast!
If you are not a subscriber to Turner’s Take Newsletter then text the message TURNER to number 33-777 to try it out for free! You may also click here to register for Turner’s Take.
Soybean Oil
Vegetable oil has be strong around the world and it is soybean oil leading beans and meal. With economies (and restaurants) opening again vegetable oil demand is growing. The four major vegetable oils are palm, rapeseed (canola in Canada), soy, and sunflower oil. Those four make up at lest 80% of the vegetable oil on the global export market. These oil stocks are projected to be at their lowest since 2016.
Soybean oil is projected to be tighter too because the industry rarely crushes soybeans for oil. They crush soybeans for meal. Meal is much more perishable while oil can be stored for years. Until meal demand picks up we expect a continued tightness in soybean oil and global vegetable oil stocks. Wheat has been rallying in part to the dryness in the EU/Black Sea. This is also an issue for EU rapeseed.
Below is a chart of July Soybean Oil. I like buying the futures. I also like buying an out of the money call and selling a put. Margins are generally under $900 for soybean oil which is relatively cheap these days. This could be a nice play as the global economy opens back up. Clients can email me at cturner@danielstrading.com or call 312-706-7610 for trading strategies
If you are interested in working with Craig Turner for hedging and marketing, then click here to open an account. If you are a speculative or online trader then please click here.
July Soybean Oil
SRW Wheat
SRW (Chicago) wheat bottomed yesterday and took off today. Two things have happened over the past two trading days
- Tuesday – Rumors of Chinese interest in US Wheat
- Wednesday (today) – Rumors of Russia lowering their new crop production and speculation of new crop export quotas
I have not been able to confirm either rumor. However, EU/Black Sea weather is a real concern and lower production is likely. The first resistance point for July SRW Wheat is $5.25 and then around $5.50. SRW wheat trades in a mini contract (1000 bushels), standard contract (5000 bushels), and I like buying a call and selling a put with this one too. Usually the big spring/summer rally is in corn or soybeans, but this year it could be wheat. Clients can email me at cturner@danielstrading.com or call 312-706-7610 for trading strategies.
If you are not a subscriber to Turner’s Take Newsletter then text the message TURNER to number 33-777 to try it out for free! You may also click here to register for Turner’s Take.
July SRW (Chicago) Wheat
Energy
I still like crude and we prefer the back months. Specifically I like Dec futures, Dec call spreads, and I like futures spreads using Dec 2020 as the front month. I want to get in on the next pullback. There is value in the deferred futures energy contracts (CL, RB, and HO) and we wanted to see June delivery come and go with out the extreme volatility we saw during the May expiration.
One can argue the market has already priced in the US reopening and the return of economic activity. I still think we chop around but the trend is grinding higher over the long term. Dec 2020 support comes in at $28. The first major resistance will be around $39 where the gap starts. The next target is the top of the gap at $44. I could take some time to get up there and we could go down $5 at anytime, but two things are clear. The first is production has come down enough make sure supplies are not going into storage on a month basis. The second is demand is increasing. The latest EIA report showed a 5mm barrel decline in supplies.
I like buying Dec 2020 futures. The standard is 1000 barrels and the mini is 500 barrels. Dec 2020 call spreads look attractive and I still like the futures spreads. Dec 20 vs March 21, June 21, or Dec 21 all have value on dips. Clients can email me at cturner@danielstrading.com or call 312-706-7610 for trading strategies.
If you are interested in working with Craig Turner for hedging and marketing, then click here to open an account. If you are a speculative or online trader then please click here.
Dec Crude Oil
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Craig Turner – Commodity Futures Broker
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