Walsh Soybean Opportunities - Pure Hedge Division

November soybeans are now trading above the 21 and 50-day moving averages with a series of higher highs and higher lows being made this month.  The USDA’s August WASDE report estimated ending stocks at 290 mb. The stocks/use ratio is 6.66%. 

Historically, the majority of US soybean exports to China occur from November to April. In the past few years, 80-90% of domestic exports to China were made during this period. A deal with China could happen before November, as a Chinese trade advisor is scheduled to meet with the White House this week and again in October. Just yesterday, President Trump agreed to let in an additional 600k Chinese students to the US. This comes after last week’s statement from Treasury Secretary Bessent who said that trade talks are “working pretty well.” Trump’s decision to let in more Chinese students is likely a bargaining chip in trade negotiations, which are expected to include US soybean purchases. On August 11, Trump urged China to 4x their soybean imports. China’s soybean imports hit a record in July, with strong buying from Brazil. China has yet to buy a single cargo of US soybeans, in the meantime, non-Chinese buyers have been stepping up; however, with a stronger dollar that could change. 

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Looking at weather, eastern parts of the Midwest are dry and will continue to be for the next week. Normal rainfall is expected in the eastern Midwest in the extended forecast. Cooler temperatures are expected for the next 2 weeks. Friday’s Commitment of Traders report showed managed money traders unwinding their entire net short position, buying 35,273 contracts. 

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Soybeans have had several quiet days recently. I think more sideways trading is possible going forward in the near-term, which could provide an opportunity to collect premium selling puts and calls. However, I am bullish on soybeans on a longer time-frame, consider the following trade idea:

Sell 1 July’26 1030 Put 22 ¾ 

Buy 1 July’26 980 Put 11 

Buy 1 January’26 1100 Call 21 ½ 

Sell 1 January’26 1150 Call 10 

Price: ¼ cent Credit    Cost: $12.50 Credit/Trade Package, Plus Fees and Commissions. 

July’26 Soybean Options Expire 6/26/26 (303 Days) 

January’26 Soybean Options Expire 12/26/25 (121 Days) 

MAXIMUM LOSS: LIMITED

I also like buying December soybean oil calls if the gap fills on the chart at 50.59. December soybean oil closed at 53.15, -.33. 

The December 60 call is now trading at 1.30. I’d wait for a better price as mentioned above. The maximum risk if you bought the call at 1.30 is $780, maximum gain is unlimited. 

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Hans Schmit, Walsh Trading

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