Overbought, Over-Owned, and Into a Seasonal Window
A Look at November Soybeans
This material is for educational and informational purposes only. It is not a recommendation to buy or sell any futures or options contract, and it does not take into account your objectives, financial situation, or risk tolerance. Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. Please see the full disclosures at the end of this piece.
To get all the graphics for the full article, use the link at the bottom of this article
The Setup
Soybeans have been on a run. November beans traded to new highs today, RSI is sitting around 74.65, and price is stretched well above every major moving average on the daily chart — roughly 67 cents above the 50-day area and well above the longer-term average. The 14-day average true range has expanded to about 23 cents, so the market is not just higher, it is moving faster.
The move has real fundamental support behind it. That is not in dispute:
Routine flash sales to China
Higher energy prices lifting the vegetable oil complex
Poor weather across parts of the U.S. over the last several weeks
Forward-looking concerns about El Niño
So why write a piece about the downside?
Because three separate, independent things are lining up at the same time, and one of them is a calendar event that arrives tomorrow. When the seasonal window, fund positioning, and the technical picture all point the same direction at once, that is worth understanding — whether you're bullish or bearish.
Thing One: The Seasonal Window
Using our Seasonal Backtest tool, we looked at selling the November soybean contract in the same calendar window each year — enter September 12, exit September 27 — settlement to settlement, one contract, over a 15-year lookback (14 years with usable data).
Hypothetical results, 14 years: (sign up with link at the bottom of the article for all the graphics)
Now the part most people skip
2012 is 42% of the entire result. That one year contributed $8,488 of the $20,300 total. Strip it out and the remaining 13 years produced $11,812 — still positive, still a 69% win rate, but a very different-looking table.
The last decade is much softer than the headline. The trailing 10-year window shows a 70% win rate but only +$4,975 total, or about +$498 per year. The 5-year window shows 80% correct at +$1,013 per year. The big numbers live in 2012, 2013, and 2014.
The drawdowns are real, including on the winners. Average maximum adverse excursion was -$1,196. In 2020, the trade finished a winner at +$125 — but was underwater roughly $2,463 at its worst point before getting there. In 2024, the worst year, the position was down as much as $2,888 and closed at -$2,713.
Fourteen observations is a small sample. It is enough to notice a tendency. It is not enough to prove one.
That last point about drawdown matters more than anything else on this page, and we will come back to it.
Thing Two: Fund Positioning Is About as Long as It Gets
Managed money as of last Tuesday was net long 234,920 contracts in soybeans, that has likely continued to expand given the run to new highs today.
For context, our Fund Positioning tool we offer tracks 1,056 weekly records for soybeans. The all-time extremes in that dataset run from -183,145 (July 2024) to +240,937 (May 2012). Today’s reading sits essentially at the top of that entire range — within about 6,000 contracts of the highest managed money net long on record in this series.
Crowded positioning is not a timing tool. Markets can stay historically long and keep going. But it does tell you something about the shape of risk: when nearly everyone who wants to be long already is, the incremental buyer gets harder to find, and any disappointment has a lot of length sitting on the other side of it. Positioning does not cause a move. It determines how violent one can be if it starts.
Thing Three: The Chart Is Extended
RSI at 74.65 on the daily. Price at the top of a near-vertical run off the August base. Every moving average below the market and fanned out. ATR near the highs of the last two years.
None of that is a sell signal on its own — overbought markets are overbought precisely because they are strong, and strong markets often get stronger. What it does mean is that the market is priced for a lot of good news, and it is a long way back to any technical support if the tone changes.
The Catalyst: Friday’s USDA Report
The September WASDE and Crop Production reports release Friday, September 11 at 11:00am CT.
The trade’s expectations lean friendly, not bearish.
U.S. Production, 2026/27
World 2026/27 soybean ending stocks are seen at 123.06 MMT versus 124.21 in August.
Trimmed yield, tighter carryout, lower world stocks. On paper that is a supportive set of expectations, and it is the clearest argument against everything above.
But note the range on new-crop carryout: 0.214 to 0.339. That is a wide band of analyst disagreement, and the market has already rallied hard into it. When a market is this extended and this crowded, the bar for a bullish surprise is high — expectations are already in the price — while the room for a disappointment is wide open. That asymmetry, not a bearish forecast, is the actual point.
How We Think About Expressing It
We do not know what the report will say. Neither does anyone else.
What we do know is what the historical data says about sitting through this window: average drawdown of $1,196, maximum of $2,888, and at least one year where a profitable trade was underwater by nearly $2,500 first. A short futures position into a report, in a market with a 23-cent ATR, has undefined risk. Huge moves against you in a market like this is not a hypothetical.
This is why we look at options for counter-trend ideas. Risk is defined the moment you put the trade on.
An illustrative structure (example)
The November $13.00 / $12.50 put spread was near 15 cents ($750) at today's close.
Who Might Actually Care About This
If you are bearish or looking for a counter-trend idea: the structure above is one risk-defined way to express it, with a known maximum loss.
If you are bullish — and that is a perfectly defensible position right now: this may be the more relevant section. If you are long paper, or long in the field with unpriced bushels, you are already positioned for the continuation. The question is not whether you are right. The question is what happens to your position if the report disappoints, the funds start heading for the exit, and a 74 RSI unwinds.
A defined-risk put spread costing $750 against a crop or a long futures position is not a bet against your own view. It is a known, budgeted cost to protect against the scenario where the market and your conviction disagree.
The Tools Behind This Piece
Everything referenced here is available to Blue Line Futures clients:
Seasonal Backtest — year-by-year P/L, win rates, and drawdown detail on any window, market, and direction
Fund Positioning — managed money net, longs, and shorts with historical percentile context across the grain, livestock, and energy complexes
Trend Comparison — contract-year overlays aligned to expiration, so analog years get tested against the data instead of argued from memory
Pre-report estimate breakdowns ahead of USDA releases
If you want to run this study on a different market, a different window, or the opposite direction — or pull up your own analog year instead of ours — we are happy to walk through it.
Right or wrong, it's the process that counts in making decisions in markets. This is how we approach markets with clients across the board, whether they be trading or hedging. Not a client yet? Get going today using the link below!
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