Soybean Futures---Soybean futures in the July contract finished higher by 4 cents at 8.35 a bushel selling off from session highs at the 8.48 level as massive short-covering is taking place as the large money managed funds are offsetting some of their record short positions.
At the current time I'm now recommending a short position from around the 8.35 level while placing the stop loss above today's high of 8.48 as the risk is around $650 per contract plus slippage and commission as I think the risk/reward is in your favor as this rally is exaggerated to the upside in my opinion.
Soybean prices traded as low as 7.91 in Monday's trade as we experienced about a 60 cent rally as you have to remember the excessive rain that we received in certain parts of the midwestern United States will cause farmers to switch from growing corn to soybeans as the fundamental and technical picture for this commodity remains negative. As I wrote about in yesterday's blog there was a price gap that was created between 8.36 / 8.40 and that was filled in today's trading action before selling off near the closing bell so play this to the downside while risking 2% of your account balance on any given trade.
The volatility in soybeans will increase substantially and will become very violent over the summer months so make sure that you understand the risk going forward as the weather will certainly dictate short term price action.
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