Monday, May 20, 2024
HomeJesse's CommentarySoybeans Shoot Higher to End the Week; Why Risk Management is Key

Soybeans Shoot Higher to End the Week; Why Risk Management is Key

(Please note, there is substantial risk of trading futures and options which you should carefully consider prior to trading. This is merely an opinion piece and does not constitute trading advice. The author is not a licensed commodity broker.)

(NASHVILLE, TN) — As I sit here and sip my morning coffee this weekend, I recall a few conversations I had this past week about the grain markets. In particular, the volatility that is back and the late week rally in soybeans.

One farmer in North Dakota that I talked to said his basis level was good enough and with $13 November soybeans on the board, he was thinking of just taking the money and moving on with his fall and winter months. This farmer said he is not worried about the soybean market itself but rather the global and economic factors that could torpedo it.

Then, talking with two separate commodity brokers/traders on Friday afternoon I essentially got the same answer that this rally in soybeans should be rewarded. Both traders are worried about the soybean market having a meal led rally that may not last and other outside factors affecting the market.

We saw it a few weeks ago with corn when it rallied above $5 in the December contract and quickly fell to the $4.70-$4.85 range that we’ve been stuck in. Soybeans did it too a few sessions ago by falling sharply before rallying again. There is a lot of uncertainty, a lot of fund managers moving money and quite frankly a lot of risk in the market right now.

That brings me to my point this week; why not look at managing your risk in some way? Too many times I hear the same story of set it and forget it. Put the grain in the bin, throw away the key and wait until you have no other choice but to sell it. Forget using one of the many marketing tools in the toolbox; just set it and forget it. That doesn’t seem smart.

So as you ponder this weekend, wrap up any remaining harvest, take a look at your balance sheet; consider that maybe it’s time to try something new with your marketing plan so you can take as much risk off the table as possible. Maybe you can reward a rally like the one we saw on Friday in soybeans and sleep a little easier at night. Pushing for another nickel or dime and losing a dollar……that just doesn’t seem wise at all.

I’m no expert, I’m just trying to use some broad based commonsense. Take my musings with a grain of salt or take it to heart. I just hope you manage your risk in some fashion because that’s what I hear about the most on any given day.

-JA

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