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Soybean selloff

Soybeans: The bulls and the bears got clipped today as the marketed was provided news for both sides.

Overnight China bought 600,000 tonnes of new crop beans and 152,400 tonnes were sold to unknown destination. Then the USDA released last week’s sales which were above trade expectations. The outside markets provided the selling initiative when crude oil fell sharply and the labor department released unemployment statistics to cause a sharp sell-off shortly after the opening. From there, traders evened up positions into the close. The soybeans have a strong historical probability of selling off after the July 4th weekend. We do not expect a free fall a market that trends lower. Next week the USDA will release its monthly supply and demand report which will be watched closely. Will the old crop ending stock drop below 100 million bushel? Our official guesstimates will be out early next week.

Trade Idea(s):
(07/01) Sold Nov 1020, risk 1044, objective 941. Closed 1006.
Option Strategy(s):
(06/09) Sold Nov 1240 call/sold Nov 800 put 62 1/4, risk to 90, objective 20. Closed 42 3/4.
(06/16) Sold Nov 1220 call 45, risk to 65, objective 0. Closed 31 3/4.
Soybean Technical Commentary: We are still looking at the possibility a short term bottom could be in place. On the other hand the bullish hand would be strengthened if this market could manage a close above the 50% retracement line shown in green.

Vital Technical Indicator: the next projected major turn day for soybeans is July 14, soybean meal is Monday, and soybean oil is July 13.

Rich Nelson
Director of Research
Allendale, Inc
4506 Prime Parkway
McHenry, IL 60050

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.

Soybeans: The bulls and the bears got clipped today as the marketed was provided news for both sides.

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