Bean Oil/Corn Spread: Take the Money

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.

July Bean Oil Corn spread daily

July Bean Oil Corn spread daily

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.

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