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’s seasonal price

moves. See pages 133–138 for additional corre-

lated trades.

Chart courtesy TradeNavigator.com

SOYBEANS (S) BARS AND MOSAIC (MOS) CLOSES

(WEEKLY DATA JANUARY 2009–MAY 2010)

ENTRY EXIT PROFIT/

YEAR DATE CLOSE DATE CLOSE LOSS

1970 6/5 266 1/4 7/28 286 –988

1971 6/7 310 1/2 7/28 331 1/4 –1,038

1972 6/7 339 3/4 7/28 337 1/2 113

1973 6/7 853 8/01 872

–950

1974 6/7 537 1/2 7/30 865 –16,375

1975 6/6 478 7/29 627 –7,450

1976 6/7 609 7/28 631 1/2 –1,125

1977 6/7 832 1/2 7/28 577 1/4 12,763

1978 6/7 666 1/2 7/28 621 3/4 2,238

1979 6/7 753 7/30 711 2,100

1980 6/6 631 1/2 7/29 762 1/4

–6,538

1981 6/5 727 3/4 7/28 746 1/2 –938

1982 6/7 642 1/2 7/28 602 3/4 1,988

1983 6/7 626 7/28 720

–4,700

1984 6/7 755 1/4 7/30 609 1/2 7,288

1985 6/7 580 3/4 7/30 519 1/4 3,075

1986 6/6 513 7/29 503 1/2 475

1987 6/5 570 7/28 534 3/4 1,763

1988 6/7 886 1/2 7/28 748 1/2 6,900

1989 6/7 647 3/4 7/28 604 1/4 2,175

1990 6/7 612 1/4 7/30 593 3/4 925

1991 6/7 587 1/4 7/30 580 363

1992 6/5 614 1/2 7/28 559 3/4 2,738

1993 6/7 587 3/4 7/28 690

–5,113

1994 6/7 646 7/28 572 1/2 3,675

1995 6/7 602 1/2 7/28 627

–1,225

1996 6/7 752 1/2 7/30 744 3/4 388

1997 6/6 720 1/2 7/29 675 1/2 2,250

1998 6/5 586 1/2 7/28 572 725

1999 6/7 473 7/28 424 1/4 2,438

2000 6/7 526 3/4 7/28 447 3/4 3,950

2001 6/7 447 1/4 7/30 504

–2,838

2002 6/7 484 1/2 7/30 531 1/2 – 2,350

2003 6/6 602 1/2 7/29 527 1/4 3,763

2004 6/7 718 7/29 590 6,400

2005 6/7 679 3/4 7/28 689

–463

2006 6/7 610 1/2 7/28 584 1,325

2007 6/7 847 7/30 831 800

2008 6/6 1446 1/2 7/30 1395 1/2 2,550

2009 6/5 1101 7/28 968 6,650

40-Year Gain $27,725

JUNE SHORT SOYBEANS (SEPTEMBER)

TRADING DAY: 5—HOLD: 36 DAYS

Soybeans Seasonal Pattern since 1968

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MONDAY

23

TUESDAY

24

WEDNESDAY

25

THURSDAY

26

FRIDAY

27

SATURDAY

28

SUNDAY

29

640K ought to be enough for anybody. — William H. Gates (Microsoft founder, 1981)

A government which robs Peter to pay Paul can always depend on the support of Paul.

— George Bernard Shaw (Irish dramatist, 1856–1950)

One only gets to the top rung on the ladder by steadily climbing up one at a time,

and suddenly all sorts of powers, all sorts of abilities, which you thought never

belonged to you—suddenly become within your own possibility… .

— Margaret Thatcher (British prime minister 1979–1990, b. 1925)

The possession of gold has ruined fewer men than the lack of it.

— Thomas Bailey Aldrich (American author, poet, and editor, 1903, 1836–1907)

If you torture the data long enough, it will confess to anything.

— Darrell Huff (How to Lie With Statistics, 1954)

Start Short Coffee(U)—72.2% Accuracy Since 1974—End Aug. 9—Page 52

End Long Soybeans(N) (Feb. 11)

Start Short British Pound(U)—65.7% Accuracy Since 1975—End Jun. 9—Page 126

MAY

FN:

CL(M)

OE:

NG(M), HG(M), GC(M)

LT:

NG(M), HG(K), SI(K)

FN:

NG(M)

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