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Grain Spreads: Bean Support Violated
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Commentary
Soybean futures suffered from more fund liquidations that sent it further into the red as values closed below a major moving average (100 MA) and a major trendline that have supported values since June. Beans once again lost their early gains and closed modestly lower on the day, despite a morning flash sale to Unknown for 120,000 tonnes. The sale was only 2 cargoes and not enough to support a rally. Meal held steady while bean oil sold off despite crude strength and December Bean Oil had its first close below the 200-day moving average support since the start of this year. Helping push soybean futures through support was soybean oil, which found funds pushing values 115 points lower on Russian statements regarding Ag exports. The Russian govt says it will meet its export obligations via other routes than the Black Sea. As we have seen since the WAR started, don’t believe the noise, attacks on each other’s infrastructure continue. That said, the technical breakdown could be significant if prices extend lower again tomorrow.
Trade Idea
Buy the Feb 12.00 soybean puts while at the same time the 1180/1200 call spread. Cost to entry is even money. Max risk is 1K per spread plus commissions and fees.
The 12.00 puts are a floor for March. beans until late January.
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
312 957 8103
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Walsh Trading
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