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Soybeans race to 2013 finish line

12/20/2013 @ 4:49pm

Beans ended the last full trading week of the year on a positive note, settling 13 cents higher for the week.

 

Argentina weather continues to be the driving factor for the move higher. The forecast is for Argentina to see temps top out in the upper 90s to 105 degrees with mostly dry conditions being seen with the heat through the first part of next week. The first shot of relief will come Wednesday into Friday.

 

The trade is concerned that the relief will not be enough to counter evaporation resulting in the need for more rain. Argentina has received enough rain recently that a few days of hot, dry weather should not do much damage to the crop’s production potential. But with next week being a shortened week due to Christmas, it looks like some in the trade choose to liquidate shorts in fears that next week’s rain does not materialize.

 

On the bearish side of the argument, the trade is concerned China will eventually cancel U.S. purchases and shift them to South American origin. We continue to look for a choppy trade next week as many in the trade will be taking next week off to celebrate Christmas, and this will keep trade volume low.


Trade Recommendation:

  • Bought a November $11.40 put, sell a November $10.00 put, sell a November $12.20 call for  4 cents. Settled credit of  4 1/2 cents.

 

 

Cattle Commentary

Higher trade was seen today as traders reacted positively to word that progress was being made to expand the offerings of U.S. beef that China accepts. This is a great sounding story. While it does fit into our overall bullish viewpoint, we will actual discount some of the bullishness of this particular story. Annual beef exports to mainland China went from almost zero in 2004, after our BSE finding, all the way up to 23 million pounds last year. However, this year, with their resistance to feed-based additives, our exports are down 17% year-to-date.

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