Soybeans May Outperform Grains Due to Farmer Challenges
The grain market has seen significant gains recently, but Rich Moran of Walsh Trading suggests that MAR Soybeans may not be as strong. According to Moran, farmers have been reporting difficulties with their corn and wheat crops due to various issues.
Moran believes that the availability of fertilizer was interrupted after the war with Iran over the Strait of Hormuz, leading to more soybean acreage being substituted for corn and wheat. Additionally, cotton growers have also shifted acres from cotton to soybeans in an attempt to control supply and boost prices.
The price difference between MAR Soybeans (ZSH27) and the combined price of MAR Corn (ZCH27) and MAR Wheat (ZWH27) has been settling at around -20½ cents. Moran suggests that if this spread package stays below its 14-day and 21-day moving averages, it could continue to decline.
Moran recommends selling the spread (ZSH27)-(ZCH27+ZWH27) at -15 cents, with a risk of $1,250 to make $2,250 per spread. This strategy is meant for investors who are comfortable with taking on some level of risk in the commodities futures markets.