Bookin’ Some Profits
The IMC blog entered a hypothetical long position in the July 2016 bean oil/corn spread at -$2,760.50 (premium corn) on October 9th. The position was liquidated at +$1,212.50 (premium bean oil) on April 21st. The trade resulted in a profit of +$3,973 per spread.
The first two-day close below the rising 50-day Moving Average since October prompted the exit. Given the fact that the spread had poked its head above the +$3k mark at the start of the month, it’s not all that surprising to finally see a pullback and perhaps even a trend change.
At current levels, the spread is not historically mispriced. So we’ll put this one on the back burner for now. A rally to +$6k (premium bean oil) or a plunge to -$4k (premium corn) would bump the bean oil/corn spread back toward the top of the watch list.