Trade Idea: Soybean Meal

GRAINS

Over the past couple weeks we’ve noticed that the bean complex has had some buying pressure from big money. We love seeing this type of bullishness in commodities from managed money. We have also been watching seasonal patterns in beans which indicate higher pricing into springtime planting. Reports also show that farmers are planning on planting less beans per acres. Everything we are seeing points bullish.

Trade Idea:Long July/Short December Bean Meal-The seasonal pattern is highly correlated with 5 year and 15 year averages tight and trending. Over the last few years this spread has shown increased volatility mid May, if trading this spread May typically marks the high print. The 15 year average price high is $30 to $40, currently trading at $10, this spread certainly has a lot of potential.

2015-02-26-TOS_CHARTS

 

We have resting orders at the up-trend line down to the grey box, between $6.50 to $5.50. Stops are being placed below $2.00. Risking 4 to 5 points.

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