Update on Corn and Soybean Spread

by Archer Financial Services | May 09, 2018
By Chris Lehner
To learn more about Chris, click here 

U.S. farmers are busy planting corn and soybeans. A couple weeks ago when it was still snowing in the upper Midwest and frost warnings were down to Kansas, it didn’t seem like planting could start early enough not to be behind even average years. But, when planters start moving across a field, and weather permits, it doesn’t take long to get crops planted. Now, it’s up to Mother Nature and time will tell if corn is made in July and soybeans in August.

Now, if markets move on supply, from planting to harvest, traders anticipate what final bushels will be. But a demand driven market will be about usage, when it is wanted, where and how bad it is wanted. Time will tell how many more soybean and oilseed acres will be planted versus corn and feed grains in the northern hemisphere. Right now, we have to believe U.S. farmers are planting more soybeans and oilseeds than grain. And because of it, traders continue to buy corn and sell soybeans.

On March 22nd and 29th I posted reports recommending buying corn and selling soybeans using three March 2019 Corn and one March 2019 Soybean. All months can be used, but I didn’t use December corn or November soybeans because many traders actively trade them at this time.

So, for those of you that have requested an update, the chart below shows what has been taking place. On March 22nd the spread settled at 187.5 and on March 2nd the spread settled at 196.0. On April 19th after moving down to the 50 and 100 day exponential moving averages, at 208.5, the market has moved to 264.0 as I write at 12:00PM central time May 8th, 2018. Unless there is a drastic change in the upcoming WASDE Report that changes expected planted acres or reduces usage of corn, not very likely, the spread should continue moving up with King Corn leading the way.

Long 3 March 2019 Corn and Short 1 March 2019 Soybean

Chart as of 12:00PM May 8, 2018 Central Time from eSignal Interactive, Inc.

If you are a speculator or a hedger wanting assistance with an analyst and broker with 30 plus years of solid experience, give me a call 913.787.6804 or send an email to chris.lehner@archerfinancials.com.

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. Past results are not indicative of future results or performance. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.