soy11

A restart in trade talks?

The wild cards: weather and Washington are still in market play.

Soybean traders are talking about the market having to perhaps back-and-fill a bit here, following yesterdays strong gains.

Bulls are still talking about rumors that the U.S. and China might be moving a bit closer to restarting trade talks. I've personally heard no specifics, other than the fact representatives of Treasury Secretary Steve Mnuchin and Chinese Vice Premier Liu He were working toward a restart of some sort.

Demand for U.S. soybeans remain strong and bears continue to backpedal. As a spec, I clearly missed an opportunity to buy the bottom, but I had already been beaten up trying to jump in on the first and second waves lower, I didn't want to keep donating by taking more shots. From a technical perspective, the new-crop NOV18 contract didn't even seem to flinch at the $9.00 level. It also traded beyond the 38% Fibonacci number and is now eye-balling the $9.40 to $9.50 area to the upside. I want to believe downside support has moved up to around $8.80. But this market has been extremely unpredictable and very difficult to forecast.

I also believe the big "wild-cards" are still in play...weather and Washington may temporarily be viewed as less bearish, but I'm not sure I trust the market with either. As a producer, I haven't made any additional new-crop sales on the rally.

I had been aggressive early and believe better opportunities are still ahead. In fact, I'm actually targeting a post-harvest time frame. I have been holding some short put premium, that I initiated months ago. I had purchased some ATM calls and sold some OTM calls and puts to finance. I legged out of the class with profits, had some good new-crop sales on, so I wasn't worried about the puts, until the bottom fell out of the market.

Then it got painful in a real hurry! The recent rally has helped bail me out and has given me an opportunity to clean up the mess. Producers who have taken major heat or were caught off sides might want to think about rewarding the recent rally in some capacity. 

 

 

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