Friday, October 21, 2022
Brazil owns the soybean market. Scary stuff. Contemplate this:
- Brazil has elevated soy acreage 40% during the last 9 years.
- They’re increasing once more this yr regardless of excessive fert costs.
- Brazil is the low-cost soy producer on the planet.
- Brazil has a transport benefit over the U.S.
- Brazil has a geo-political benefit over the U.S.
- Brazil has a forex benefit over the U.S.
- Report massive soy manufacturing has already been forecast.
I contend that U.S. soybean costs won’t stay elevated beneath the burden of the large benefit owned by Brazil. We tried promoting Dec bean oil yesterday and simply missed getting stuffed. Decrease the entry value to 7040. The seasonal excessive is in place. Critical merchants simply should be brief by the shut. Some choices should be made by the shopper. Maintain the bearish corn place, ready for a take a look at of 660. The soybean technique is penciled out under. I’m bearish.
- If the Nov soy settles above 1370 tomorrow, assume the brief place from 1420 and place a purchase cease within the deck at 1407 cease.
- Advocate promoting Dec soybean oil at 7040, if stuffed, place a purchase cease at 7215 cease. The present spec margin on bean oil is $3,300.
- Good cash is seeking to promote Nov 23 soybeans.
Is the USDA damaged? There’s nonetheless no closing pork report from yesterday and no closing money hog market. So right now we’re buying and selling in the dead of night. Hog futures traded very mild quantity yesterday of 29k however open curiosity surged greater, rising by 2,433. Open curiosity was greater in almost each contract. Actually? Who’s the client right here and why? My guess is that funds are the key gamers and so they do not know why they’re shopping for. IMO, they’re about to get a whipping. I strongly advocate getting the Jun 90 places coated right now. We’re working GTC orders at 180 factors. Get them stuffed. Hedgers want to think about safety. I’m bearish.
OK, I’ve updates on the money steer exercise from yesterday. The next has been reported. TX 6700 head at 148, KS 9100 head at 148, up $3 from final week. NE 15100 head at 152 and at $236 dressed, up $3 to $5. IA 5800 head at 151 and at $236. The negotiated quantity stands at 81.6k with an upward revision due this morning and, in fact, one other day to commerce. IMPRESSIVE STUFF. This information ought to proceed to assist the board right now forward of the on-feed report. Open curiosity was up 131 so no huge conclusions from this. Zero deliveries towards the Oct LC with the oldest lengthy now at 8/16. For those who’re trying so as to add to the place, contemplate the three-way danger reversal penciled out under. I don’t search for this market to cease for some time.
- Contemplate the Apr LC 156/168c/152p paying 165 factors. The 156 name is 160 factors within the cash. Threat this new place to a detailed under 15400.
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