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This week's revision report eyed
The trade continues to look towards the August 11th report as a possible game changer with yield questions continuing to move the market. Beans have been true to its trading range as 14 proved as good resistance last week and we head back towards 13. The revised acres report that will be out with the supply/demand numbers Thursday which could also create a few surprises for the trade.
Last week's fundamental support: The
beans looked to the outside markets for general direction today. The early sell
off in the stock market and the crude caused initial pressure on the beans but
even with a rally back in the outside markets the weather and poor demand
continued to keep pressure on the beans throughout the remainder of the
Heating oil has been no stranger to the economic ripple from Europe
and the slowdown in the US economy. A downtrend has been in place for the past
4 months in the heating oil. In addition to pressure from heating oil, soyoil
is getting hit from its own fundamentals. Through June we have put 1.325
billion lbs of soyoil into biodiesel production. To meet USDA’s 2.300 billion
goal, that leaves 975 million lbs left to use from July – September (325
million lbs each month). That is a bit optimistic considering the most recent
month showing only 248 million lbs of usage! Bean oil demand is going to
continue to suffer as long as biodiesel demand is under pressure. According to
the AP wire funds sold 5,000 contracts of beans today.
Soyoil Woes: Cordon
mentioned that 325 million lb. goal to meet USDA. The red area of this chart,
soybean oil usage, shows we could not even hit that level during the high
energy prices of 2008.
(7/19) Bought September 1350 put 25, risk to 0, objective 40 cents. Closed 39
Closing Cattle Commentary
Cash cattle actively traded
at $113 today! That $4.50 gain beat out early week expectations for only a $1
to $2 increase. This should solve any questions about a low being placed for
summer. Even more important, today’s move comes even in the face of all the
economic jitters! Earlier this week we officially called an end to the second
leg down in cash prices for the summer. If you are not long in some way it is
time to get long…Rich Nelson
- (06/15) Sold February 110 put 3.10, risk 1.75, objective 0. Closed .97.
- (07/14) Sold October 120 call 2.47, risk 3.25, objective 1.50. Closed 2.57.
- (08/01) Sold December 116 put 2.60, risk to 4.60, objective 0. Closed 2.40.
- (08/02) Sold February 124 put 5.95, risk 9.20, objective 0. Closed 5.45.