Stopped out of Soybeans

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I was expecting Soybeans to close lower today, but nowhere near limit down. The market touched limit down during the session and just before that I was stopped out. The overbought nature of the market and the pressure of harvesting were finally able to push the price down with the strengthening of the dollar as the catalyst. Wheat and corn closed limit down for the day and it will be interesting to see how much further wheat will fall.

Having no positions now open, I have a decision to make, whether to take my money and set it aside to build up a reasonable stake once more or to open another position in something. Initially I was leaning towards putting the money aside for the time being. However right now as I see that this correction was across the board, including not just grains, but metals, energies and softs, I think I might instead see if there is something that is worth getting involved in.

So much for my worries at the weekend of feeling comfortable with my position in soybeans. If I don’t quite feel the hunger, I’m not feeling the fear. Of course, I have yet to pull the trigger. I won’t be getting involved tomorrow, it’ll be the following day at the earliest before I open a new position. In the mean time, I will be looking at everything to see what the possibilities are at the moment.

Open Positions

None

Account Details

Account Balance: €585.48
Open Position P/L: €0.00
Account Position: €585.00
Overall P/L: -€1464.52
   

links for 2007-10-02

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Too Much Fear, Not Enough Hunger

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Today is the end of September, and last Friday saw a lot of funds moving money around at the end of the month. I’ll assume that there will be some carry over of that change around tomorrow. For me though, things haven’t changed all that much from last week. Soybeans finished the week +12 cents and there is no signal to get out yet. I’m not even going to change my stop loss this week, as I’m happy with where it is at the moment. The coming week may have choppy waters as the news at the tail end of last week percolates through the market and it decides what it’s going to do.

Wheat is tantalising. I don’t know how much higher it’s going to go but the knowledge that due to my own mistakes I have lost out on the biggest move of the year is frustrating and infuriating. In short, I’m afraid of it clouding my judgement. Then there’s the fear, that just as I get in, it’ll reach its top and then start the slide down. In truth, it’s more likely that it’ll go up and then move sideways for a while before falling back down again.

As I look around the various commodities that I have been interested in and keeping an eye on for the last few months, I see that a few trends appear to have started, but again I’m feeling the fear. If you’ll forgive a metaphor. I feel like a hunter who’s been knocked up badly not so long ago, let’s say an elephant. I barely escaped with my life but now I’m back out on the plains and I’ve got a few animals within range. As I line up the sights, my eyes lose focus and I can’t pull the trigger. I can feel that some of these trends could be big movers in the months ahead, but I just can’t seem to get over the experience of being almost wiped out.

This fear is affecting my hunger for the markets as well. I’m comfortable with soybeans at the moment, that’s all that my trading diet consists of right now. I’m too afraid to branch out into other markets, due to this fear of my account getting wiped out and the idea that I’m too late to get in on these trends. I need to get out of this state of comfort and back into a mindset where I have the hunger and I can lose the fear. So that’s my little assignment for the week, to get back into the game and stop sitting on the sidelines.

Seesaw, Margery Daw

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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
   

Break on Through to the Other Side

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Soybeans sailed right on through the $10 mark. The underlying fundamentals have been stacking up for a while now with increasing demand and falling supplies and since August have manifested themselves in a huge push upwards of the price. No doubt, the falling dollar and the continued march upwards of wheat have also been a major influence and today was no different.Wheat made a new record today at $9.3925. If the fundamentals are strong in soybeans, then they are doubly so for wheat at the moment. It is possible that what we have been seeing in wheat recently will be happening in soybeans next year. This all depends on how the planting goes in the coming months. If wheat continues upwards as it might do and reach its own $10 mark, then soybeans are going to be hit hard and won’t be able to recover the 5 million acres that it needs to.

The new record in wheat doesn’t evoke much regret anymore and I’m starting to think that perhaps I should get back in with a new long position. Then again Jim Rogers has already stated earlier this week, that he wouldn’t buy wheat at the moment; “I don’t like to jump on a moving bus.” I respect that man’s opinion. So I start thinking should I be entering a short position in wheat, before I finally come to my senses and remember that I do have a plan and any time I have strayed from that, the result has been serious damage to my account.

Back with soybeans, the USDA reported export sales at 745,600 metric tons, nudging close to the upper end of estimates. A new three year high was hit at $10.1775. Prices were last at this level in May 2004, when it hit a high of $10.64. Prices are still a bit away from that but the March and July ’08 contracts did reach $10.41 today.

Tomorrow is another Friday and there is another report due out from the USDA, this time on grain stocks, so there is some new info for the market to play with but the consensus appears to be that there will be no suprises. So I’m expecting the usual short-covering towards the end of the day tomorrow following this week’s continued action breaking upwards.

Open Positions

Asset Contract Position Change
Soybeans November 2007 Long +18.63

Account Details

Account Balance: €271.48
Open Position P/L: €583.52
Account Position: €855.00
Overall P/L: -€1195.00
   

Harvesting Pressure, Planting Support

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I did catch some of the market action today and it seemed to me that wheat was pulling up corn and soybeans for most of the day. In the end though, with wheat giving up some of its earlier gains towards the end of the session, the short-term factors weighed heavily on soybeans with the harvest underway and yesterday’s USDA report indicating a better crop condition. The question now is, how much will the coming harvest impact on the bidding for next year’s crops. Northern Brazil still has weather that is too hot and dry for planting and will continue to be like that for the next couple of weeks according to the forecast. I note that soybeans today closed 3 1/4 from the low and 9 off the high. I think I can expect more days like today, with the price of wheat being the supportive factor.

Open Positions

Asset Contract Position Change
Soybeans November 2007 Long -5.87

Account Details

Account Balance: €271.48
Open Position P/L: €437.52
Account Position: €709.00
Overall P/L: -€1341.00
   

Soybeans Finally Take A Breath

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After ten sessions, soybeans finally closed down. I was expecting it and indeed have been waiting for the past three days for it to happen. It seemed very likely that it would need to take a breath, having risen 4% this week alone. With nothing new today to help the bulls push forward and the combines starting to roll out with good weather for the harvest in the US, it was only surprising to me that more profit-taking hadn’t happened earlier in the week. I guess I have China to thank for that. Clearly the market believes it is currently overbought. Now, to wait for next week to see if this breath becomes a breather.

Corn again seems to be of most interest having closed up once again. I suppose when you’ve potentially got the biggest crop since the 1940s, and the reports have been good so far, but the price is still going up, that’s one hell of a surprise and hence big news. Wheat only drew a few wistful sighs from me today as it touched limit-up once again and closed up 24 cents. *sigh*

As my account is now a little healthier, I will be looking for other potential positions over the weekend. It certainly feels like I’ve missed the boat on several opportunities over the last four weeks. It will need some careful consideration, to be covered in my very first WRAP UP.

Open Positions

Asset Contract Position Change
Soybeans November 2007 Long -10.00

Account Details

Account Balance: €271.48
Open Position P/L: €460.00
Account Position: €731.48
Overall P/L: -€1318.52
   

Expected Consolidation, Unexpectedly Postive

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Soybeans finished with another gain for a ninth session. I found that surprising, expecting a consolidation more on the negative side than on the positive side. All the more so with wheat finishing down 24.1 for the day, having earlier reached limit down. From the various and varied opinions of analysts, it appears that the support for soybeans is coming from underlying bullish fundamentals. In the shorter term, weather continues to be the major factor, with dry weather in Brazil delaying the planting of next years crop and the continuing idea that hot weather in August has damaged the current crop. This presumably is coming from bad reports from early harvesters. As one farmer from Illinois put it, “On August 1 I thought we had great potential, now it appears that we will have the worst bean crop in 20+ years.”I am always wary of reading too much into the crop comments at AgWeb, however it appears quite possible that the harvest will be as disappointing as the market currently believes it will be. More interesting to me though is the idea that if the harvest is bad, soybeans will still not be as tempting for farmers at their current price level. Soybeans will have to go much higher to make it interesting and worthwhile for farmers who will be thinking that next years crop could be just as low. This makes wheat and corn the safer bet in their eyes. This hadn’t occurred to me previously. This is one of the reasons why I read AgWeb most days. It gives me an insight on what the farmer’s viewpoint and I find that fascinating.

Tomorrow, the USDA will be releasing their weekly export sales. I personally believe it needs to be reasonably high within the expected range of 300,000 to 500,000 metric tons for the price to continue on its move upwards. Last week, it came in at the lower end at 346,500 metric tons. Then again, what do I know, the market will do what the market always does, it sets the price despite whatever I think. I find that reassuring in some ways.

Open Positions

Asset Contract Position Change
Soybeans November 2007 Long +1.75

Account Details

Account Balance: €271.48
Open Position P/L: €431.00
Account Position: €702.48
Overall P/L: -€1347.52
   

Solid but Quiet for Soybeans

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Soybeans traded in the same range as yesterday. It looks to me like another day of consolidation. Opening at its highest at 974.0, it was unable to break through yesterday’s new contract high of 974.4. In the end, a quiet day.Wheat closed down 6.0. I will be interested to see how this market changes over the next few days having now reached what appears to be a plateau. My interest in wheat lies in the fact that up until the end of August, I had a long position which I was unable to roll-over due to lack of funds. So I just missed out on the recent surge in prices, a fact that continues to grieve me. Wheat should also be providing some support for Soybeans as part of the upcoming bidding war for next years plantings.

Open Positions

Asset Contract Position Change
Soybeans November 2007 Long +1.0

Account Details

Account Balance: €271.48
Open Position P/L: €421.52
Account Position: €693.00
Overall P/L: -€1357.00