Commodity Trader's Almanac 2O11

54

SHORT SOYBEANS

FOR SUMMER

After planting season has finished through the

bean belt of Illinois and up through Minnesota,

soybeans tend to post a seasonal peak. Once the

crop is actually planted, the fear of a reduced

crop size due to planting delays from late spring

storms has abated. When the crop is in the

ground, traders start focusing on the potential

size of the new crop. In addition, supplies are

available from the South American harvest, and

this puts additional pressure on prices.

By mid-June we have a good understanding of

the crop size due to what was planted. Under ideal

weather conditions, traders tend to sell the market,

as producers and grain elevators start hedging or

forward contracting out their crops production.

This marketing effort can last through harvest time.

The new genetically modified (GMO) seed,

Roundup Ready by Monsanto (MON), is more

resistant than ever to insects and drought or heat

stress. In addition, there has been more worldwide

acceptance of this technology. U.S. farmers have

increased usage and production to over 85% of

this variety. This may explain why, under normal

weather growing years, prices tend to decline, as there

is a better estimate of the crop size.

The chart below has the fertilizer company

Mosaic (MOS). Traders looking to capture moves

in soybeans may want to explore taking out posi-

tions in companies such as Mosaic that tend to

correlate to the commodity’ ...