I’ve been watching the May 15 Soybeans – Corn spread closely over the last couple of weeks, looking for any kind of strength in soybeans. Overnight we started to get some strength on the back of China and I decided to finally get long here a touch below 580. We got some follow through during the US session which was a nice start.
From a fundamental perspective there are plenty of soybeans around at the moment. We’ve got record crops in South America and strong prospective plantings and weather that is in line with expectations. If we see only an average yield this year, ending stocks could well be the highest they’ve been in more than five years.
As a result soybeans have been really weak.
As a general rule I don’t like to fade fundamentals – however this is a spread I like the look of.
Given the weak fundamentals and the fact it’s an inter-market spread, I’ll be trading small size and keeping a tight rein on this one.
On Wednesday we have NOPA crush numbers out and this could prove decisive. Let’s see how this plays out for the rest of the week.