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Veteran Advisor

thoughts of market reaction to trump

i write this to get ideas and opinions on markets and trump.

my feeling, at current, the commodities with the biggest chance of impact is corn and soybean.

i think soybeans could be neg impacted.  First, due to the idea that alot of beans will be planted

in the U.S. and we've got to get rid of them.  our biggest buyer is china.  trump wants to  modify

trade with china, and his basic idea i believe is, we are getting the short end of the stick.

the problem is, china used to import alot of "trinkets"....but now they have advanced to high

tech electronics and others.  i really don't know off hand what we have they would be interested

in other than food, and maybe auto...while on this side, we just love our electronics.

mexico can be a difficult one....again, what are we going to export other than farm goods ?

while they utilize their inexpensive labor to make goods, cheaper than we can in the USA.

 

so, where does that leave us ?  i think the market might start to become uncomfortable....

maybe the jitters.....and when in doubt, let it bottom out.

 

this might be the year to get yourself positioned this "spring"...or i should say, before all the

wildness starts with trade talks.....maybe somehow get you foot in the market, but in case of

a wx scare, or things work out good, we could see things go up, and somehow recoup the

market go up.

 

what will fall out....i don't know, but i think it wise to be prepaired for the worse, and hope for the

best......

 

now to figure out a cost effiecient way to do that.

 

cheers

 

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Honored Advisor

Re: thoughts of market reaction to trump

Basically, if we get a supply cutting drought grain prices will rally above cost of production...but then the drought will somehow be "Trump`s fault"   Smiley Happy   Kind of a win-win for Trump bashers.   In a nutshell these multilateral trade agreements, "they" will buy a couple billion in ag products from us, if we agree to buy $10s or $100s of billions more in computers, cars and pink flamingoes...Then those of us in farm country get to say "Yipppee skippy, we aren`t getting our revenue from the gummitt, we`re getting it from the market place!".   Well, it`s coming from somewhere.

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Veteran Advisor

Re: thoughts of market reaction to trump

Are you recommending puts or synthetic puts, or what?

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Veteran Advisor

Re: thoughts of market reaction to trump

Jim that is a good question
There are people around here that have
Far better market skills than myself.

I agree a straight option program would be
Expensive
Looking at money NC beans around 65 cents
Then figure basis here we would be locking in a price of
Around $8.60. (Whipple 😭)
But on the other hand...and correct me if I'm wrong
Cost to get into a contract is about 3K, so similar "market costs"
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Veteran Advisor

Re: thoughts of market reaction to trump

i must admit i was wrong in part of my above post  (a trump moment...sorry devil made me say it Smiley Happy)

 

as far as the "marketing cost" using a contract, i stand corrected, current soybean margin is about $2100 compaired to

$3000.  also as far as "the cost"....if no margins went aginst you, you would get your $2100 back.

 

 

so, if you knew, with a certainty, that beans were at the top, then going with a contract would be the most cost effective.

only other market cost would be commission, which could run from a few dollars to $80.

 

as we all know, biggest problem, and i guess, i don't know if you would call it a "problem", is if things go aginst you.

but, in this instance, if things go against you, or you need to make margin calls, the price, or value of your commodity

goes up, which i guess is "good".....perhaps one could be rolling up, but to me it just feels "un-natural"....(but i can't feel

much anymore), to get a contract, have to pay out margins, then jump out and spend more money on  a "margin"

again.....but i guess we're going up then right ?

 

i will admit, i know the theory, but actual function, i'm still learning.

 

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Honored Advisor

Re: thoughts of market reaction to trump

And it is not a cost........ It is an account balance requirement.

It is yours as long as it isn't needed to cover your losses.

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Veteran Advisor

Re: thoughts of market reaction to trump

Typically, one would think of buying a call at this time of year when the market should be at a lower point, then selling futures or buying a put later in the year when prices improve. In a typical year, as the market got more certain one could exit the call for whatever one could make on it and exit the short position about when the contract expires.  Easy to say but I've not always been very good at it.

 

The problem as was stated above is that this year may well not be typical.  It may be that the recent run-up in beans might be putting SA weather into the crop and as SA bullish news is factored in and if the US crop is large, beans may not get any higher.  In addition, if China and Trump play hardball, exports could suffer (even if China switched to SA, someone would buy some/most US beans) there could be a further push down on bean prices sometime this year.

 

On the other hand, maybe global weather is a factor and Trump and China play kissy face and beans go over $11, maybe higher.

 

Who is to know?

 

If one was really confident that beans would go way high or way low, maybe a put would pay for itself.  But if beans trade in a range we're better off doign nothing.

 

I don't know what to think.  I'm short MAR beans and will play them only for a short time  but the issue Cheapo raised was Nov.  I'm at sea.

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Honored Advisor

Re: thoughts of market reaction to trump

Cheapo you bring up a question in my mind....

 

If China owns Walmart who sells chinese made products in the US.  Are those walmart sales imports?

If Japan owns egg production in the US and ships eggs to its home office in Japan, are they exports?

 

if corn gluten pellets are bought in the US by the Japan owned egg producer for use in the US are they exports?

Or if they are shipped by the US based Japan owned company to Japan for use?

 

Are corn gluten pellets and DDG's exported out of the country Ag exports?

Is beef, pork, or beer shipped out of the country Ag exports?  

Now that china owns syngenta do they import less?

 

The inport/export issue is foggy to me..... but today I was looking at that New Jersey milo data and looking at the map of the source and I see a lot of chickens owned by Japan.  It just signaled to me how I have more questions than answers on trade and balance thereof.

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Veteran Advisor

Re: thoughts of market reaction to trump

Sw good point. Take Smithfield pork, which
I think is china. Would the pork shipped to
The motherland...how is it ?
They are also buying elevators and buy grain

An interesting idea...are we going to see corn
And bean seed rise 30 to 40% due to a duty,
Since the company is from china....same
With herbicide
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