Soybean "Old/New" Crop Spreads Non-Confirmation of Selloff

Strategy of the Day 11.11.2019

Soybean Old/New Crop Spreads; Non-Confirmation in a Selloff

I noted earlier today that the Jul20-Nov20 Soybean Calendar spread is holding up rather well (down -1.25 cents), while the outright front month soybean futures (Jan20) is down -14.50 cents (at the time of writing this). This non-confirmation in the calendar spreads of the outright futures selloff, may be an early sign of commercial interests buying via bull spreads. With no actual deliveries in the soybeans being reported, commercial interests are instead rolling forward their shorts to the new front month future. This leaves the futures market with a flood of selling pressure into the Jan20 contract, however, its not translating to as much selling pressure in the more deferred months. This is leaving the Jul20-Nov20 spread rather unchanged, and without the same decline that is affecting the front months at this time. Fundamentally, this is suggesting selling might be short lived; as this movement in the front month futures could be seen as a convergence towards ...

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