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deasmatt90
Senior Contributor

Re: Soybean Marketing Plan

Timetippingpoint, I just spend an hour typing my sales plan and rules that I folllow and lost everything when I attempted to post. Will post later my rules and plan. I have a few! For now, What are the fundamentals or facts telling you? Is the market over or underpriced according to facts. What is the probability of the facts changing during the marketing year and to what extent? What is smart money doing? (Notice I said doing and not saying). Is 10.60 at Chicago profitable for you with basis? One of my biggest rules is preservation of capital and profits. What has happened every time at 10.60? Will it continue to happen? I don't know these answers. i can only watch and make decision based on information at that time. Only two decisions, sell or do nothing. neither one right or wrong just a decision made. They are made right or wrong later by market action.
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deasmatt90
Senior Contributor

Re: Soybean Marketing Plan

The only time I feel I have made the wrong decision in any market is buying or selling in conjestion. If I had soybeans to sell I would have sold half by now. But that's me. My price target would have been 10.55 to 10.60 range. And this is considering no change in fundamentals from the beginning of the year. But that's me. If they go above that I'll be told I was wrong. If they go below I will be told it was a lucky guess. In the end we should all do what we are comfortable with individually anyway. My goal is to post information on the technical side that was taught to me by people who held past positions at investment banks. they taught me not only the places this information could be found but the questions to ask that can help us all make better decisions for ourselves when it comes to being in open markets.
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deasmatt90
Senior Contributor

Re: Soybean Marketing Plan

My personal opinion on beans is that we will long term see a breakout from the 10.55 resistance area to higher price levels, but I wouldn't bet the farm on it. Will it happen this season? Quite possible. Why do I think this? Because producers are essentially out of money due to low prices for so long. Producers are to the point they have no choice but to cut back. Banks are pulling away from financing letting the weaker operations fold. many planting the same acres will attempt cutting input costs and do with less yield and many cutting back acres will do the same. At the same time demand goes up each year in small increments creating a supply imbalance. I believe we will see this scenario in all ag markets except livestock. Inflation and distribution in the NYSE causing decline in the stock market will magnify these effects on price due to investors from other markets entering commodities markets.
sw363535
Honored Advisor

Re: Soybean Marketing Plan

This forum tends to think they are all rich and economics don't affect production....yet they go ape and plant more corn over a new ethanol plant.   go figure...

 

In kansas wheat acres are down so production will be down...... Corn acres are down some every year because of water restraints and COP.   And Bean acres were up last year and expected this year because Cargill(crushing most of our bushels) is setting records on negative basis because they think they will get more than they want.....I am not sure that is true,  3 years ago they would send trucks to pick it up at harvest 200 miles west..... this year they don't offer anything....make unfounded claims about truck availability in April for fall delivery.... Acres may not be there and will not if wheat corrects.  And for sure if corn keeps going up.  Feedlot markets out west are pricing corn now for fall north of $4.45....... a bean basis of -1.45 will affect planting this spring.  It is a local issue (we outproduced Cargill locally) but not a national issue...... but it affects acres.

 

The US Grain user side of the market has real competition and has nearly maxed out production.  Beans have run on thin carry for a long time.  We can produce more, but only at the expense of something else.  China and usda are keeping the cotton acres steady and up.  Ethanol and corn are married and a 3 million acre shift will make that market take notice... But 3 m acre shift only adds 150 million bushel to the bean supply.  Not a surplus builder...

 

If south american bean production is down,,, as it obviously is, and china needs to make up the shortfall and answer some criticism over trade deficits, we do not have the carry to accommodate.

 

It takes a lot of "betting on the come" by usda and the buyers to overlook the obvious.

 

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timetippingpt
Honored Advisor

Re: Soybean Marketing Plan

Well the bean plan worked to perfection, What we need now is a plan to manage

the weather risk, which is huge at this point.

 

I like the SU900 calls for 20 or so since we are playing weather roulette.

🙂

 

A better buy is to sell some 840 SU puts and buy some 840 calls (keeping the

10.30 hedges in place if you are conservative.) but I don't have the cash flow

to fund that if beans go to 6.80. So, I'll take the bad delta and the wasteful

OTM calls. Just deduct the .20 from our average price isn't too bad.

 

Sometimes swinging for the fences is the right thing to do. Between 7/1

and 8/17 this year could easily be such a time. My timing and VR's is really

quite different this year. After this decline, and maybe we go sideways a few

weeks, but then, the demand side is stronger than the supply side most

likely, so we could rally more than some expect.

 

Crops that look great in June seldom yield great, probably 50/50 as I calculate

it. Price is already trading the 50% perfect ending. Thus logic would tell us

that anything on the other side of 50% perfect growing conditions is not

bearish price, at least not by much.

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