For those so inclined, it may be a good time to purchase soybean put options and hope they expire worthless.
I believe the canola market gave us insight to what impact China may have on the rest of the ag markets before this is all over.
Soybeans and corn prices had been building a good base over the winter in anticipation of a deal between the US and China. Recently China talked about a $30 bil increase in purchases of US agricultural products as part of a deal. This would have significant impacts as the record annual purchases had been $24 bil. This is the part about you hoping the put options expire worthless with a major deal getting done.
The problem is, traders are getting nervous that the wheels may be falling off the bus behind closed doors.
The daily soybean chart is rolling over, turning decidedly bearish in the short term. The weekly chart had a sell signal given by technical indicators. These combined suggest last years low of $8.14 could be tested if China walks away from the deal. For those interested, May soybeans closed today at $8.95.
I realize most producers in Western Canada don't grow soybeans but should that market drop close to a $1/bu US from here, it won't help canola at all. It's too late to do anything about the last Chinese smack but at least soybean puts would help from being hurt further should China back away.
As far as the cost, the better the coverage, the more the premium. As of Friday, July $8.80 puts closed at $.14/bu, $8.60's at $.085 and $8.40's at $.04 7/8.
For anyone interested, corn is in the same boat but should have less downside risk and more upside potential (should a deal be concluded).
Just a thought...
I believe the canola market gave us insight to what impact China may have on the rest of the ag markets before this is all over.
Soybeans and corn prices had been building a good base over the winter in anticipation of a deal between the US and China. Recently China talked about a $30 bil increase in purchases of US agricultural products as part of a deal. This would have significant impacts as the record annual purchases had been $24 bil. This is the part about you hoping the put options expire worthless with a major deal getting done.
The problem is, traders are getting nervous that the wheels may be falling off the bus behind closed doors.
The daily soybean chart is rolling over, turning decidedly bearish in the short term. The weekly chart had a sell signal given by technical indicators. These combined suggest last years low of $8.14 could be tested if China walks away from the deal. For those interested, May soybeans closed today at $8.95.
I realize most producers in Western Canada don't grow soybeans but should that market drop close to a $1/bu US from here, it won't help canola at all. It's too late to do anything about the last Chinese smack but at least soybean puts would help from being hurt further should China back away.
As far as the cost, the better the coverage, the more the premium. As of Friday, July $8.80 puts closed at $.14/bu, $8.60's at $.085 and $8.40's at $.04 7/8.
For anyone interested, corn is in the same boat but should have less downside risk and more upside potential (should a deal be concluded).
Just a thought...
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