Soybean meal futures rose in mid-June amid Israel-Iran tensions but retreated after a ceasefire. Even a 129% month-on-month surge in China’s May soybean imports failed to support prices.
Spike in import volumes is a consequence of normalisation in customs clearance and a rebound in crushing plant activity. In April, imports plunged to a decade low of 6.08 million metric tonnes due to delayed Brazilian shipments and port congestion. June imports are expected to remain elevated (~12 million tonnes), fuelling oversupply concerns.
Rising soybean oil prices, driven by higher crude and seasonal biofuel demand, have led to increased crushing, further boosting meal supply.
China’s terminal feed factories are working through high inventories, dampening near-term demand. With China accounting for two-thirds of global bean imports, anaemic demand is a solid bearish price driver.
Elevated supply and tepid Chinese demand pose downside risk for soybean meal prices in the near term.
TECHNICAL SIGNALS POINT TO BEARISHNESS AS WELL
Bearish momentum in soybean meal has strengthened, with prices sliding sharply since 23/Jun. A death cross formed on 25/Jun, as the 21-day Displaced Moving Average (DMA) crossed below the 9-day DMA amplifying bearish sentiments.
Additionally, prices fell below the 50-day DMA on 24/Jun and have remained below it, reinforcing the downward trend.
Bearish MACD and a weakening RSI signal continued weakening of meal prices.
OPTIONS MARKET SIGNAL BULLISHNESS IN THE MEDIUM TERM
For the week ending 16/Jun, Managed Money’s net long positioning in soybean meal futures fell by 23.4%, reflecting an 11% drop in longs and an 8.9% rise in shorts.
Soybean meal's implied volatility has risen since 25/Jun, with skew picking up from 27/Jun, despite falling prices. This points to rising uncertainty & potential for wider price swings.
Source: CME CVOL
Option open interest points to muted activity in the near term. However, Overall open-interest put-call-ratio point to bullishness.
Source: CME QuikStrike
Strong call OI buildup from July to November signals medium-term recovery hopes.
HYPOTHETICAL TRADE SETUP
The downtrend in soybean meal futures looks set to persist, with both technical and fundamental signals reinforcing bearish sentiment.
While rising IV, skew, and an oversold RSI hint at a possible near-term bounce, any mean reversion is likely to be short-lived without a shift in underlying fundamentals.
Seasonally, July–August tends to mark seasonal lows as inventory builds pressure prices further, particularly in China.
This paper posits a tactical short on CME Micro Soybean Meal August futures (MZMQ25 expiring on 25th Jul), targeting a decline in prices.
Investors can use the CME Micro Soybean Meal Futures, which are sized at one-tenth (10 short tons) of standard contracts (which are 100 short tons). This allows for a cost-effective method to express a short-term bearish stance. As of 27th Jun, the minimum exchange margin on this contract is USD 170 per lot.
• Entry: USD 284.5/Short Ton
• Potential Profit: USD 264.5/Short Ton (284.5– 264.5= 20) x 10 = USD 200
• Potential Stop-Loss: USD 297/Short Ton (284.5- 297 = -12.5) x 10 = USD 125
• Hypothetical Reward-to-Risk Ratio: 1.6x
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER, the link to which is provided in our profile description.
Spike in import volumes is a consequence of normalisation in customs clearance and a rebound in crushing plant activity. In April, imports plunged to a decade low of 6.08 million metric tonnes due to delayed Brazilian shipments and port congestion. June imports are expected to remain elevated (~12 million tonnes), fuelling oversupply concerns.
Rising soybean oil prices, driven by higher crude and seasonal biofuel demand, have led to increased crushing, further boosting meal supply.
China’s terminal feed factories are working through high inventories, dampening near-term demand. With China accounting for two-thirds of global bean imports, anaemic demand is a solid bearish price driver.
Elevated supply and tepid Chinese demand pose downside risk for soybean meal prices in the near term.
TECHNICAL SIGNALS POINT TO BEARISHNESS AS WELL
Bearish momentum in soybean meal has strengthened, with prices sliding sharply since 23/Jun. A death cross formed on 25/Jun, as the 21-day Displaced Moving Average (DMA) crossed below the 9-day DMA amplifying bearish sentiments.
Additionally, prices fell below the 50-day DMA on 24/Jun and have remained below it, reinforcing the downward trend.
Bearish MACD and a weakening RSI signal continued weakening of meal prices.
OPTIONS MARKET SIGNAL BULLISHNESS IN THE MEDIUM TERM
For the week ending 16/Jun, Managed Money’s net long positioning in soybean meal futures fell by 23.4%, reflecting an 11% drop in longs and an 8.9% rise in shorts.
Soybean meal's implied volatility has risen since 25/Jun, with skew picking up from 27/Jun, despite falling prices. This points to rising uncertainty & potential for wider price swings.
Source: CME CVOL
Option open interest points to muted activity in the near term. However, Overall open-interest put-call-ratio point to bullishness.
Source: CME QuikStrike
Strong call OI buildup from July to November signals medium-term recovery hopes.
HYPOTHETICAL TRADE SETUP
The downtrend in soybean meal futures looks set to persist, with both technical and fundamental signals reinforcing bearish sentiment.
While rising IV, skew, and an oversold RSI hint at a possible near-term bounce, any mean reversion is likely to be short-lived without a shift in underlying fundamentals.
Seasonally, July–August tends to mark seasonal lows as inventory builds pressure prices further, particularly in China.
This paper posits a tactical short on CME Micro Soybean Meal August futures (MZMQ25 expiring on 25th Jul), targeting a decline in prices.
Investors can use the CME Micro Soybean Meal Futures, which are sized at one-tenth (10 short tons) of standard contracts (which are 100 short tons). This allows for a cost-effective method to express a short-term bearish stance. As of 27th Jun, the minimum exchange margin on this contract is USD 170 per lot.
• Entry: USD 284.5/Short Ton
• Potential Profit: USD 264.5/Short Ton (284.5– 264.5= 20) x 10 = USD 200
• Potential Stop-Loss: USD 297/Short Ton (284.5- 297 = -12.5) x 10 = USD 125
• Hypothetical Reward-to-Risk Ratio: 1.6x
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER, the link to which is provided in our profile description.
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Full Disclaimer - linktr.ee/mintfinance
免責聲明
這些資訊和出版物並不意味著也不構成TradingView提供或認可的金融、投資、交易或其他類型的意見或建議。請在使用條款閱讀更多資訊。