The DeCarley Perspective Trading Newsletter

Are "beans in the teens" old news?

  This newsletter was emailed to clients on August 22, 2011

Futures Market Analysis

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**There is substantial risk of loss in trading futures and options.

**Past performance is not indicative of future results

On the radar:

·         Are "beans in the teens" old news?



The USDA reduced its estimates of 2011/2012 ending soybean stocks from 175 to 155 on August 11 to trigger a rally from the lower end of the current trading range.  However, the jury is still out as to whether the run will be able to lift November beans above the upper end of the trading envelope.  We feel as though the fate of beans will be heavily influenced by trading in the currency markets and it seems as though the long-term prospects for a stable to higher dollar could work against the idea of a dramatic soybean rally.  That said, speculative buyers are active and would could see moderately new highs before buying runs out and the market fulfills its pattern of softening prices into October. 

With the most recent USDA revisions, the stocks to use ratio is a skimpy 5% but on the world scene it is a more comfortable 24%.  This simply means that supply on hand will be enough to meet 5% of domestic demand and 24% of global demand.  Either way, there will be little tolerance for poor crop conditions.  As of today (August 22nd) the USDA reported that 50% of soybeans were raged good to excellent, this is down from 64% a year ago.  With that in mind, we feel as though there could be enough pessimism to drive prices above $14.00 in the November contract and perhaps a bit higher if speculations run rampant we could see a full retest of resistance near $14.60ish.  The chart could find resistance near $14.30 and this is where aggressive traders might consider playing the downside with the assumption that position trades could suffer if the later resistance area becomes a target.    




Soybean Futures Market Analysis

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**There is substantial risk of loss in trading futures and options.

Past performance is not indicative of future results.  The information and data in this report were obtained from sources considered reliable.  Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities.  Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.


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