Cats & Dogs Strategies

March 6, 2010 The issue at hand is how much of a drop will bean meal take? Unless we have a surprise rise in bean oil prices, a drop in meal translates directly to a drop in the price of beans themselves. Looking at how the commercials are positioned (slightly long beans and clearly short meal) makes one think that they would like to bring bean prices down a bit to prepare for the possibility of a nice run up later in the year. Argentina is in considerable political upheaval, in no small part because the corporate farms want to export most of their soy crop to China, thereby increasing the cost of food to their countrymen by about 20%, while the government has elected to tax food exports by the same 20%, thus depriving some of Argentina's wealthiest citizens of millions in profits.

In the meantime, perhaps meal will get down to $180 or worse, down to $80. Beans would like slide down to $7.70 in the first instance or $5.60 in the second. If you have beans in a silo somewhere, selling the May contract at $9.50 with the intention of delivering should prices rise looks like a nice hedge/speculation.