Soybean Strength May Offset Corn and Wheat Market Gains

The grain markets have seen significant gains recently, with new highs being reached on a regular basis. According to Rich Moran of Walsh Trading, this strength in corn and wheat markets is largely due to negative news from farmers regarding their crops.

Moran believes that soybeans may end up being more plentiful than initially anticipated, as it takes less fertilizer to grow soybeans compared to corn or wheat. With the availability of fertilizer disrupted due to the war with Iran over the Strait of Hormuz, some acreage was substituted with soybeans instead of corn.

Another factor contributing to increased soybean supply is cotton growers substituting acres of cotton with soybeans in an effort to keep the supply of cotton lower and strengthen its price. The price of a soybean contract has been very close to the combined price of a corn contract and a wheat contract, settling at -20½ cents on MAR Soybeans (ZSH27) minus the combined price of MAR Corn (ZCH27) and MAR Wheat (ZWH27).

Moran suggests selling this spread package when it opens tonight, targeting a sale price of -15 cents. He recommends leaving a resting order to sell at that level.