Due to Friday’s rally after USDA’s report I decided to offset my long position (March soybeans), hoping that I would sell it at a higher price. However, On Monday, soybean futures were also pressured by profit-taking to exit bullish bets to curb risk. As a result, my loss from the closed contract was “-5163.5”.

Closed Contracts

However, I made a right decision by taking spread (one long and short positions); thus, I was neutral to the price movements. Overall, at the end of the week my total gain from spread type was “250”despite the loss in long position “-1025”.

Open Contracts

What went right from I anticipated that China made a purchase of soybeans from USA, so it could make prices up on Thursday and on Friday in the light of the reduction of Canola production in Canada, the soybeans went up, especially, Benchmark CBOT November soybean futures rose 19-3/4 cents, or 1.3 per cent, to end at $15.51-1/2 a bushel.  (for more details at “The Road Ahead”)

The USDA will release its monthly report on crop supplies and demand on October 11; it is expected that USDA will increase its expectation of the harvest, but since the cold weather in northeastern North Dakota and northwestern Minnesota (the main soybean and corn crops regions) may slow down the harvest, there might be the unexpected reductions on USDA’s forecast.  Therefore, I am anticipating the price increases after USDA’s report on October 11.

One more thing about South America’s harvest, despite fact that it is reported, “the US Department of Agriculture’s Brasilia bureau raised its forecast for the 2012-13 Brazilian soybean crop, currently being planted, by 82.0m tonnes, 1.0m tonnes above the department’s official forecast, citing the boost to yields from extra fertilizer applications.”, port congestion and logistical issues are making constraints to fertilizer imports.

“These logistical problems could result in a slower planting pace of the 2012-13 soybean crop than what was originally anticipated.”, said the USDA bureau.  In other words, it has to do with soybean harvests in South America that might cause the shortage of the world supply of soybeans due to transportation issues and its high costs.

Since, the market is very volatile I will hold my spread position to avoid the risk, and continue to follow news on commodity market. (Especially, I want to figure out issues with genetically modified soybeans why Russia and Europe have initiated to ban its import that might have a huge impact on a soybean market).

References:

http://en.mercopress.com/2012/10/05/decline-in-canada-s-canola-crop-impacts-on-oilseed-markets

http://www.weather.com/news/drought/crops-cold-snap-20121005

http://www.agriculture.com/markets/analysis/soybeans/soybe-futures-shed-friday-gains_10-ar26653

http://www.grainews.ca/news/u-s-soybeans-rally-on-damage-to-canola-crop/1001744212/