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Commentary

Soybeans succumbed to a trove of bearish data in early week trade following the release of USDA’s Quarterly Stocks Report. While the data was mostly neutral for soybeans, lacking buyer interest from the top U.S. soybean purchaser continued to cast a dour tone over the complex. Meanwhile, a dive to a nine-and-a-half year low in meal futures exacerbated pressure, though short-covering gains quickly ensued. Trump’s post indicating talks with China regarding soybeans was certainly a catalyst. Harvest continues to progress across the U.S., while plantings in Brazil advance. Weather in South America will become an increasing focus as the calendar year winds down. Much of the attention in the market this morning was on the ongoing US Government shutdown and the lack of information trade is receiving, both in commodities and financial markets as well. Sides remain far apart on demand and indicate this shut down could last, causing job loss and economic stress. The rapidly advancing US harvest will be at a point next week where we should have a better indication of crop potential. In my view many crop scouts are walking back corn yields but holding soybeans steady for now.  The export side is where the real concern lies. China has thus far booked zero bushels of U.S. soybeans; versus the 841 million bushels it imported from us last year. Sustaining its current stance wouldn't drop our exports by 841 million bushels, as it would squeeze other buyers out of the Brazil market who would come here, but the risk is that exports fall to 1.4 billion bushels or lower. If exports fall that low, we could see ending stocks swell to 600 million bushels with a stock to usage coming in at a hefty 15 percent. Of course, this also assumes yield is above 53 BPA. This was the same type thinking we expected last year, only to find that late season drought took the top off the crop and final yields fell to 50.6. I expect the same type of revisions this year as last year, where late season drought this year in the Eastern belt could drop yields from 53.5 to 51.5 at 6 million less harvested acres than last year. At some point we will have a better gauge and handle on price direction. Funds are just as confused most likely in beans with managed money near neutral on futures and options positions. It is my opinion that we won’t be trading in this 10.00 to 10.60 range as we enter into 2026, as I see ending stocks either growing to at least over 500 million bushels, where beans could trade to 950 to 900, or demand returns with the crop downgraded as well that pulls ending stocks down to 200 million bushels with a futures rally to 12.00. Trade idea into 2026 below that may take advantage of either scenario should it occur.

Trade Idea

Futures-N/A

Options-Buy the March soybean 2026 950 put and buy the March 2026 soybean 12.00 call for 10 cents OB plus commissions and fees. 

Risk/Reward

Futures-N/A

Options-The risk on the trade is $500 plus trade costs and fees. Use a stop loss at 4 cents on a good to cancel basis which risks approximately 6 cents or $300 plus commissions and fees.  Offer to exit the strangle at 50 cents for a 44 cent gain less trade costs and fees.

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Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

312 957 8103

888 391 7894 toll free

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slusk@walshtrading.com

www.walshtrading.com

Walsh Trading

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Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices.PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.