china >> Trading on Thin IceTrading on Thin Ice

So much, for no surprises in the USDA’s grain stock report. Soybeans came in at a record 573 million bushels, well above estimates. Having read the report when it came out, I expected today to close well down. It did, all but reversing yesterday’s gains. Those extra 20 million bushels in the current stocks provide a little more leeway for next year’s inventories.Some analysts are indicating that today’s lower close was more to do with end-of-month profit-taking than anything else. That may well be true. The market made more leaps and bounds this week, so I would expect the usual profit taking to happen. In any case, I don’t see that the underlying fundamentals have changed. I note that China bought another 120,000 tons. Then again, Bloomberg is reporting that Palle Pedersen an “agronomist” at Iowa State is feeling very confident about this year’s crop for soybeans:

“The crop is going to be very good” and “Farmers are very happy with the yields they have been harvesting.”

This is part of my fascination with the markets, they are almost always so contradictory in nature. One day, they move up, the next they move down. (Unless it’s wheat it seems.) A simple idea such as the colour of grass is purple one day and pink the next, sometimes its even orange and blue at the same time. The bears and bulls sit on opposite sides of the seesaw, taunting each other:

Seesaw, Margery Daw,
Johnny shall have a new master.
He shall earn but a penny a day
Because he can’t work any faster.

Monday is a new week and I have no idea which way the market is going to go, except for wheat, it’ll probably go up.

Open Positions

Asset	Contract	Position	Change
Soybeans	November 2007	Long	-17.62

Account Details

Account Balance:	€271.48
Open Position P/L:	€511.00
Account Position:	€782.48
Overall P/L:	-€1267.52

September 26, 2007 icetrader 0

Support Stronger Than Expected

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Well, I guess I was a little right. Planting is providing the support, it’s just a lot more than I had anticipated at the moment. The factor’s haven’t changed, Brazil and wheat are still the major reasons behind the support. Dow Jones‘ outlook for the day had it summed up in their opening line:

Soybean futures on the Chicago Board of Trade are poised for a higher start to Wednesday’s day session, taking their cue from the overnight theme, as bullish underlying fundamentals absorb seasonal weakness

Add in China, with speculation that they will be increasing imports as their own output is expected to fall to an eight year low, and there was plenty of things for the bulls to run with. High of the day was 9.92, so the $10 mark is yet to be reached, but it didn’t close far off of the high at $9.90

There’s a lot more concern about the harvest today, even with the report earlier in the week that the crop condition was improved. Any ideas that the USDA’s prediction earlier in the month might have been too small is seemingly evaporating.

There’ll be more news tomorrow with the weekly export sales from the USDA out. Expectations are higher this week, between 500,000 and 800,000 metric tons. Friday will see the USDA report on current Grain Stocks. Having left the relative doldrums of the last few day’s little to no news, which way will the wind now blow?

Open Positions

Asset	Contract	Position	Change
Soybeans	November 2007	Long	+17.13

Account Details

Account Balance:	€271.48
Open Position P/L:	€506.52
Account Position:	€778.00
Overall P/L:	-€1272.00

September 24, 2007 icetrader 0

Unnoticeably Quiet

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I wasn’t keeping an eye on the market at all today. I just about caught the pre-opening reports but other than that I didn’t see much. All in all, I don’t appear to have missed anything. The news this morning was about Paraguay and the expected good harvest there. Soybeans opened a little higher and traded in a fairly tight range, before closing -0.25. There was some news about another sale to China, but really it was just a quiet Monday.

The USDA released the weekly Crop Progress report as they do after the market closed and it wasn’t all that surprising. 12% of the crop has been harvested which is slightly below the expectations I’ve been reading. The crop condition improved some more and this will be an interesting factor in tomorrow’s movements.

Open Positions

Asset	Contract	Position	Change
Soybeans	November 2007	Long	+0.13

Account Details

Account Balance:	€271.48
Open Position P/L:	€462.52
Account Position:	€734.00
Overall P/L:	-€1316.00

September 20, 2007 icetrader 0

Soybeans Ease the Pain

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Corn seems to be grabbing the bigger headlines today, but for me soybeans continue to play up a storm. Now into it’s tenth successive positive close, soybeans continued to make fresh three year highs, reaching 996’4 early in the session. The USDA‘s weekly exports figure came in comfortably at the higher end of expectations at 513,600 metric tons. It was also reported over night that China will be lowering import duties to help combat hyper-inflation. This news was seen as more important for corn with China obviously needing more for food consumption than they are producing this year, but it was also seen as positive with China being the largest importer of soybeans. Both of these no doubt were the major bullish factors on today’s movements in soybeans.With the November 2007 contract within a whisker of $10 and the following three contracts already above the $10 mark, can this week end by breaking through this resistance point? I doubt it. It may reach the $10 during the session but with the usual closing of positions and weekend hedging, I’m expecting it to do no more than consolidate around or lower than today’s closing price.

Today however marks an important psychological milestone for me as my account finally reaches back over €750. This signifies the last of the lump sums that I deposited into my account several weeks ago. I was hugely over stretched at the time and followed it with more foolish behaviour that eventually with one mistake lost me a huge chunk of my capital. Since then, with my capital so low I was forced to cut right back on my positions and as a consequence missed out on the major movement in wheat recently. That lesson has been hard won, but I believe well learned at this stage. My open position profit also made it over €500, another nice number to reach. Of course, I realise that these are not concrete figures nor that they in fact mean much, but since so much of trading is psychological, it remains important to me. It also means that I have a new goal in mind and as such is a step forward.

I’ll leave you with an excerpt from a short article by Nico Isaac, introducing two publications (Monthly Futures Junctures and Daily Futures Junctures) that provide analysis on commodity markets.

Sorting Soybeans: The media reports are more “mixed” than a bag of beans: “US soybean harvest forecast to be smaller than last years.” — VERSUS — “Soybean acres could be on increase next year.” And, “Soybean harvest faces another threat: freeze damage.” — VERSUS — “There are no specific harvest concerns at this time.”

The September 18 Daily Futures Junctures has ONE clear message: “I believe this is a market to watch this week.”

Open Positions

Asset	Contract	Position	Change
Soybeans	November 2007	Long	+18.38

Account Details

Account Balance:	€271.48
Open Position P/L:	€503.52
Account Position:	€775.00
Overall P/L:	-€1275.00