1234 - 10/21/2014 07:00

1586, you mentioned in passing: "What do you think about Nov. bean expiration. HINTS of funds maybe getting the $10 puts to expire worthless?" Would you please elaborate more on what this means and how this might work out. I interpret this to mean the funds will try to raise the price enough above $10 such that these put will miss the $10 strike price, yes?
As for the discussion concerning the commercials being long. I think you're correct. I suspect that we need to remember who the commercials encompass and what their situation may be. I envision the commercials to be three classes, the merchandisers who buy beans from the producers, crushers & endusers ( obviously), but also those very large exporters who actually take delivery and arrange the exports (fill the ships). When producer selling stagnated last summer (seen by the decline in commercial shorts) and next year soybean export sales accelerated we saw a dramatic rise in commercial longs. I took that to mean that booked sales and sold beans on speculation. Speculation maybe isn't the right word. They booked sales at price X then protected themselves against a price rise by buying the futures. Remember there were 25 million metric tons (915 mbu) of export beans booked by midsummer. And who knows how much the crushers hedged. Now the interesting point about those commercials who are long they have no real incentive to sell their positions to the short speculators. Quite the opposite, they can take delivery and have an incentive to do so. They want the beans and have the facilities.
Add to this the rather significant harvest delay.

I don't have enough confidence in my analysis of the situation to know whether there is any merit to it but I would enjoy hearing some comments and opinions.