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Market eyes USDA data

July soybeans finished the day 1 cent lower at 1426 and the November contract finished 8 cents lower at 1332. We saw two export sales of soybeans announced at 8 am this morning. Egypt bought 120,000 tonnes of old crop and China bought 410,000 tonnes, 60,000 old crop and 350,000 new crop. The Egypt purchase was a little bit of a surprise. Egypt accounts for about 3% of the total purchases for the year. They have already booked 1.03 million tonnes not including today’s purchase. Total soybean bookings for the year, so far, are at 36.36 million tonnes. The trade is focused on weather right now, as we wait to see if this crop, which is planted in dry soil, will receive the rain it needs. The trade is also focusing on the supply and demand report that will be out on Tuesday at 7:30am. This will be the first major report that we will be trading during the report’s release. The trade is expecting old crop soybean stocks to be at 189 million bushels and new crop to be at 143 million bushels. The new crop number looks very friendly. But, we need to keep in mind that Allendale is expecting an additional 2.0 million acres be planted to soybean on the June 29th report. Be cautious moving forward as tight crops usually means volatile markets.

Beef that comes from feedlots accounts for around 80% of total production. The remainder of production comes from cow and bull retirement. June it typically the peak month of steer and heifer slaughter of the year as all of those fall calf placements come due. It is with this pressure that we just cannot get excited about calling this week’s rebound to $122 cash as confirmation of a bottom. Don’t worry though, we will get bullish on this market and very aggressively so in the coming weeks.

 

Trade Recommendation:

(6/8) Sell Oct 118 put 1.50, risk to 3.00, objective 0.

Working Trade:

(5/17) Sold Oct 120 put 2.25, risk to 4.00, objective 0. Closed 1.90.

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Rich Nelson 

Director of Research 

Allendale Inc. 

4506 Prime Parkway 

McHenry, IL 60050 

815-578-6161 

Hypothetical performance results have many inherent limitations, some of which are described below.  No representation is being made that any account will achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.  One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight.  In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading.  For example, the ability to withstand losses or adhere to a particular trading program in spite of trading losses are material points which can adversely affect actual trading results.  There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

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