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Commentary

Corn, soybeans, and wheat were under pressure to start today’s trade along with several other markets in response to the shutdown of the US government. The greatest concern now is how long this may last and how much information flows it may disrupt. For example, the next WASDE report from USDA has now been postponed until November. Soybeans in my view had no bullish fuel until President Trump made remarks on social media that he was going to meet with Xi Jinping regarding the soybean trade within a month and make soybeans great again. There was a swift move by speculative funds to buy up the soybean complex. Beans, meal and bean oil all finished in the green today. Have not seen much of that lately. Whether you give credence to a social media post or not, this market needed a story and, in my view, has one. I’m aware its harvest and storage concerns remain an issue, but the potential exists that this bean crop is shorter than what was given by the USDA in August and September. With the government shut down the unknowns to the market increase as no data from USDA is forthcoming. In my view, the path of least resistance in the bean complex maybe higher given renewed demand hopes amid a short bean crop east of the Mississippi.

Trade Idea

Futures-N/A

Options-Buy the January 26 soybean 1080 vs 1180 call spread for 8 cents or better. 

Risk/Reward

Futures-N/A

Options-The maximum risk is 8 cents or $400 plus all commissions and fees. I look for January soybeans to potentially test the 11.00 level again. Risk no more than 5 cents on the spread or $250 from entry with an objective to exit at 30 cents less commissions and fees.

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Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

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