May
16
Potential Soybean Trades
Filed Under Uncategorized |
p>China is the largest importer of soybeans in the world. The United states, China, Argentina and Brazil are the largest producers of soybeans globally. Thanks the the increase in population in China its demand for soybean imports is rising. The last few years China has been buying the majority of the soybeans made in south america and a large amount of the soybeans made from the US. The estimated imports of soybeans are 9% larger than than the 2003/2004 record year. Due to weather issues as well as a decrease in soybean production as many farmers are instead planting corn for ethanol, global supplies of soybeans are very tight. As you can see in the chart below china has had to take steps to secure basic bean supplies for industrial and domestic use with the resulting increase in price
Recently reports from many soybean buyers have begun surfacing that they are unable to secure sizable amounts of soybeans from US farmers.As a result of this shortage, we fully expect the cash bean market to improve over the next several weeks. Effects of this shortage can be seen in the recent movement of the nearby May/July bean spread, which has appreciated significantly and is slowly taking the carry out of the market. Cash market fundamentals appear to be improving, which should lend a helping hand to soybean bulls.
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Investments to consider:
1. Buy July Soybean futures with Stop at 12.75 and Limit at 14.50
Capital intensive, higher risk for short term losses.
2.Buy July Soybean 15.00 Call options.
Options cost 20-40 cents, lower overall risk, less capital intensive.
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