Basic Knowledge on Soybeans

COUNTRUES	PERCENTAGE of world production	PLANTING	HRVEST
United States	38%	Soybean crops are planted beginning in late April and last through June.	Soybeans are mainly harvested in late September and are finished by the end of November.
Brazil	25%	Mid-August through mid-December.	February through May.
Argentina	19%	October through December.	April through early June.
China	7%	Late April through mid-June.	September through early October.

Cool Source of Information 

Sep. 24, 2012

http://www.bloomberg.com/news/2012-09-24/corn-soybean-harvests-accelerate-on-dry-u-s-midwest-weather.html

From this website, we can find latest news about agriculture commodities.

Sep. 25, 2012

http://www.reuters.com/article/2012/09/25/markets-grains-idUSL4E8KP4JC20120925

What did it say?

1. Earlier harvest on dry U.S. Midwest Weather. (The soybean harvest may be 14 percent smaller at 2.634 billion bushels.)

2. “The vast majority of farmers are looking to sell soybeans right out of the field to take advantage of record prices at harvest.”

3. “Soybeans are falling on fears of less Chinese demand for U.S. supplies,” said Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago. “Economic growth is slowing more than expected in China.”

4. A weaker dollar—EQ3

The expectations that U.S. supplies will be tight in the months to come.

Advancing Midwest harvest and good yieds”Farmers are going to hold on to their beans, and it could get tight between now and February,” said Gerry Gidel, chief feedgrain analyst at Rice Dairy LLC in Chicago.

5. U.S. soybeans ended marginally higher on Tuesday after a seesaw session, which saw talk of end-user demand and a weaker dollar lend support though gains were limited by an advancing Midwest harvest and accounts of good yields.

What can I get?

The supply of soybean will increase, and the instant supply of soybeans increase a lot and the price maybe go down in the short term.

Because China is one of the largest importer countries of soybeans, the worldwide demand for soybeans may be less, which would lead to the decrease of price.

And the weaker dollar will boost the purchase abilities of other countries. Thereby the demands of importer countries will be more.  At the same time, positive outcome of harvest encourage farmers to hold on their beans for higher price in the future.

For this week, I checked the price change on GMEGroup.com by minutes and found that the future contract price of soybeans dropped gradually.

My reaction:

At first I offset all of my trades before, Because this week I just want to focus on I checked Gulsana’s blog and she said that she believed that holding a long position on soybeans is a right choice for this week. However, based on above analysis, I think, in the short term, the price will go down but may go up very soon. Therefore I decided to buy a short position on S3F and monitored the price change every couple of minutes.

Position	Submit Time	Submit Date	Type	Contract	Quantity
Long	148	09-25-2012	Market	C4U	1
Long	148	09-25-2012	Market	SM2V	1

Sep. 26, 2012—Sep. 27, 2012

 

http://www.agrimoney.com/news/dismal-export-data-send-corn-futures-lower-again–5040.html

You can find news as well as daily price change on many crops.

What did it say?

1. The data about future contract shows a positive trend on price.

2. Soybeans for November recovered losses to get back into positive ground, up 0.75 cents at $15.73 ¾ a bushel with an hour or so of trading to go in Chicago.

What did I get?

1. The data about future contract shows a positive trend on price.

2. Soybeans for November recovered losses to get back into positive ground, up 0.75 cents at $15.73 ¾ a bushel with an hour or so of trading to go in Chicago.

What can I do?

I found that the January contract price of soybeans began to rise according to the data on GMEGroup.com, and I thought the increasing price of soybeans would come very soon. Therefore on Sep. 26, I bought a short position on S3F and then I offset my it on Sep.27.

Position	Submit Time	Submit Date	Type	Contract	Quantity
Short	231	09-26-2012	Market	S3F	1
Long	1110	09-27-2012	Market	S3F	1

Sep.28

http://usda01.library.cornell.edu/usda/current/GraiStoc/GraiStoc-09-28-2012.pdf

The release of the crop reports typically coincides with the relatively large price changes. So paying attention to the report release date on this website will have a big effect on the prediction of crop future and spot prices.

What did it say?

Old crop soybeans stored in all positions on September 1, 2012 totaled 169 million bushels, down 21 percent from September 1, 2011. Soybean stocks stored on farms totaled 38.3 million bushels, down 21 percent from a year ago. Off-farm stocks, at 131 million bushels, are down 21 percent from last September. Indicated disappearance for June – August 2012 totaled 498 million bushels, up 23 percent from the same period a year earlier.

What can I do?

On Sep. 28, the release of crop stock report involved a big change on wheat, corn, soybeans and coffee. The price change reached around 30.

My reaction:

I instantly bought 2 long positions on S2X (November Contract) and the price in was 1594.

What went wrong:

However, my reaction was a little bit late. If I choose to hold a long position on November Contract on Sep.27, the price-in price would be 1579, but I bought it on Sep.28, the price rose up to 1594 quickly. Therefore I lose the chance to realize more gains.

Long

1112

09-28-2012

Market

S2X

2

Overview of data

Closed Contracts

Date In	Date Out	Contract	Position	Price In	Price Out	Gain / Loss
2012-09-12	2012-09-20	W2Z	Long	883	876.5	-326
2012-09-13	2012-09-25	C4U	Short	613.75	610.75	149
2012-09-17	2012-09-20	SM2V	Long	506.1	495	-1111
2012-09-20	2012-09-25	SM2V	Short	495	484.2	1079
2012-09-26	2012-09-27	S3F	Short	1588	1579	449
Total Gain/Loss on closed contracts						240

Open Contracts

Date In	Contract	Type	Position	Price In	Committed	Contract Value	Gain/Loss
2012-09-28	S2X	Market	Long	1594	2700	80050	350
2012-09-28	S2X	Market	Long	1594	2700	80050	350
Total Gain/Loss on open contracts							700

 Daily Change on November Contract.

Sep 28, 2012	1598.38	1576.13	1613.63	1561.50	1.40%
Sep 27, 2012	1576.25	1577.88	1583.88	1557.63	-0.11%
Sep 26, 2012	1578.00	1610.38	1610.88	1565.13	-2.09%
Sep 25, 2012	1611.63	1607.75	1625.38	1604.38	0.25%

Data comes from :http://www.forexpros.com/commodities/us-corn

The Road Ahead

United States Department of Agriculture’s (USDA) Friday report shocked future contract trading market. However, after the almost limit-up of corps, the effect of the report is weaker now. Therefore the first step is to  offset my long position on soybeans. Next week, I will focus on wheat and corn. Because they are substitutes, the price change will coincide with each other. According to the storage stock, I will hold a short position on December contract and then offset it and buy a long position on July contract. However, I will adjust my strategy based on the update data on Agrimoney and GMEGroup website. For this week, I don’t want to make more predictions because I am not sure whether United States Department of Agriculture’s (USDA) Friday report is true or not. I will test it next week.