Profiting from China Soybean Tariffs?


Apr

19

2018

Profiting from China Soybean Tariffs?

Click To Read Video Transcript

(Video Transcript)

Good afternoon. This is James Cordier of OptionSellers.com with a market update for April 20th. Well, a lot in the news lately concerning tariffs and a possible trade war with the likes of China, of all countries, the second largest economy in the world. The Trump administration, I think, is basically playing a game of chicken and getting them to lower tariffs in their country and getting more of a fair trade platform. I think everyone is pretty much in favor of that.

We’ve had a lot of questions recently… What would a trade tariff mean to some of the positions that we hold in commodities? Wouldn’t that be bearish for commodity prices? Good question. Over the last several weeks, there has been a lot of discussion about it and, primarily, soybeans are one of the target commodities that a lot of people are discussing. A tariff against soybeans and putting a premium on them would probably be negative to prices here in the United States and probably neutral to bullish in countries like Argentina and Brazil.

Our commodities that we trade here, of course, are on U.S. exchanges. We are actually positioned for soybeans to fall later on this year, so a tariff against soybeans would actually probably help our position there, so we’re certainly not too overly concerned about that, but we do watch and wonder what implications might mean to the different commodities and we’re certainly abreast of that. Quite often, a lot of investors look around the country for different aspects of what can move the markets.

Interestingly, right now is the incredible snow and rain in the northern parts of the United States right now. Generally speaking, that will be bullish for large prospect for corn and soybean harvests later this year. So, as we are hoping for a very large crop in soybeans, some October-November of this year, and lower prices, which would actually profit our accounts, our hats are off to those of you in the northern United States bearing the cold and the wind and the rain and the snow. That is helping all of our accounts later on this year.

So, for those of us around the world and in the southern half of the United States, our hats are off to you. Thank you very much. We do anticipate that actually helping our accounts later on this year. That should be a nice addition to the strangles that we’ve applied recently in silver, some $13-$14 around the price of silver, practically 100% of the underlining price. In crude oil, we’re looking at strangles of $52 and $53 wide on barrels that are now worth $60. Basically, we’ve been reloading accounts after a really nice 2017. We’ve spent the last 90 days positioning in markets like that with what we think are going to be great opportunities that will certainly be bearing fruit later this year. We’ll just have to wait and see.

Anyone wanting more information from OptionSellers.com can visit our website. If you’re not already a client and wish to become one, you can certainly contact Rosemary at our headquarters in Tampa, Florida about possibly becoming one. As always, it’s a pleasure chatting with you and look forward to doing so again in 2 weeks. Thank you.

  1. Hello,
    I saw this on Agrimoney “Heavy selling leaves coffee prices vulnerable to ‘disproportionate’ bounce”. Do you look at how many shorts positions are open or calls sold on coffee?
    Is it the time to sell puts?

    Nuha

    • Michael Gross Says:
      April 24, 2018 at 4:29 pm

      Nuha,

      Good question. Yes, we look at commitment of traders reports. They can show you who is selling and who is buying but also if a market is getting too heavily weighted to one side. However, as a timing tool, I would not recommend the COT report. Remember, markets can remain irrational longer than you can remain solvent. We take the COT reports as one ingredient in an overall trade profile.

      I hope that helps.
      Regards,
      Michael

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