Soy is the king of speculative trade "soy" complex. The complex includes soybeans, soybean meal and soybean oil. Soybean meal is used primarily as food. Poultry and livestock producers use the majority of soybean meal. Most soybean oil used for cooking and salad oil.
For about $ 1200 margin account that can handle a contract of 5,000 bushels of soybeans worth about $ 35,000. A 10 cent move equals $ 500. (example: a 750 movement 760)
For around $ 600 you can handle 60,000 pounds of soybean oil worth $ 16,000. A movement of $ 1 equals $ 600. (example: 28 to 29)
For about $ 900 you can handle 100 tons of soybean meal worth about $ 20,000. A full 10-point move equals $ 1000. (eg 210 to 220)
As you can see, you are allowed the privilege of tremendous influence. There is great potential for both profit or loss if you decide to use it. Note that are not can use leverage and may deposit all or part of the value of the contact in your account. For example, if you keep $ 35,000 in your account for a contract soybeans, has 100% of the contract for soybeans and essentially no leverage in negotiating
Recently, soybean oil has become known as an alternative fuel source. (Bio-diesel) Similar attention goes to corn / ethanol fuels.
There is a negotiation strategy based on the transformation of soy products. It's called "crush" spread. It works by purchasing a soybean contract, then selling soybean oil and soybean meal contract. End profit, you want the contract for soybean oil and soybean meal contracts. The "spread" is the difference between the two legs.
There is also a "reverse crush" spread. Be sold in touch with one of soy, then purchase a contract for soybean oil and buy a contract for soybean meal. Note note that a contract for soybeans ($ 35,000) worth approximately the same value as a contract oil and meal. ($ 16,000 and $ 20,000) Therefore, it is extension of a reasonably balanced.
Soybeans, soybean oil and soybean meal futures tend to trend in the same direction, but still have different patterns and habits. It's a good idea to buy the strongest of the three and sell the weakest of the three. One way to determine the strongest is to see the increase bottom of the graph in an uptrend. Choose the product takes the highest in the background. You want more with each step upward sloping trend. This is the most strong buying group. You can also view this evidence when comparing one fund formation side between the three. Reverse this to analyze an area ahead of the sale to discovered.
For the serious trader, soy complex futures and options are one of the top commercial products. They have everything, liquidity, volume, open interest and large movements up and down. The graphs show that many classical pattern. Search triangles, head and shoulders, shoots, spikes and gaps. Soy may be the dream of a chartist's. Beans also have regular seasonal and cyclical patterns to use as a rough guide.
The soybean market trends often for long periods of time because it is based on a specific crop. In the past forty years, the lowest price was in 1968 to $ 2.38 a bushel. The all-time is 1973, to $ 12.90.
The Berrido bean bulls has been a "Beans in the teens!" It may happen one day.
In the past five years, soybeans from Brazil and Argentina have become major producers. Their season crops are the reverse U.S. traders USA need to keep an eye on the production of our neighbor to the south and growing seasons. Some say that soy will not approach the maximum age because of these new suppliers in the market. Never say never.
Of course, time is a major market mover. During the summer, moves large can occur around monthly or weekly reports. Sales in these reports can be profitable. Fifty-cent move limit ($ 2500) are not unusual when the market is rolling and a report comes out.
The soy complex is open to all kinds of different strategies in options and futures. It spreads, straddles, strangles and synthetics are all good ways to trade when the forecast is of high probability.
The CBOT recently launched electronic commerce as well as during the night in a shorter session. At this point, all options remain soybean complex traded in the pits.
Wheat futures and options are probably the more volatile grain group. Wheat can move very quickly. Wheat is more suited to an intermediate operator commodity they want faster results and greater risk. Wheat futures and options to combat trade of corn and soybeans. This is probably because the rain is not so important for wheat as corn and soybeans.
Over the past forty years, wheat has traded as low as $ 1.20 in late 1960 and as high as $ 7.50 in mid – 1990a. One dollar per bushel moves can occur when the market is active. ($ 5,000) Holding on to your hat when the wheat trade. There is an old adage that says operator: "Do not sell their wheat to a boil!" It is true that wheat has a tendency to end a bull campaign with fireworks and ear covers. The shortage of panic are exclusive of raw materials. The shortage of rare in the stock market.
Good Trading!
There is a substantial risk of loss in futures trading and options and may not be suitable for all investors. Only risk capital should be used.
Thomas Cathey – 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his market forecast TimeLine Trading charts and get his complete 44+ lesson, “Thomas Commodity Trading Course – all free.” [http://www.thomascapitalmanagement.com/commodity/welcome.htm] Main site: [http://www.ThomasCapitalManagement.com]
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