Meal/Bean Spread: Pyramid Criteria Was Met

Double Up

The blog entered a short position in the Dec-Nov soy meal (x2)/soybean spread at +$21,125 (premium meal) on June 23rd.

The blog entered a second short position in the Dec-Nov soy meal (x2)/soybean spread at +$17,690 (premium meal) on August 2nd.

December Soy Meal Soybean (x2) spread daily

December Soy Meal Soybean (x2) spread daily

We are now short a pair of spreads from an average price of +$19,407.50.  Both positions will be risked to a two-day close above +$20,690 (premium meal), which is $3k above the ‘add-on’ entry price.

At the very least, we are looking for the December spread to return to the April 4th contract low of +$8,975.  However, historic precedent makes it a reasonable expectation for the spread to ultimately make it to ‘even money’ or lower.  Therefore, we are going to continue adding to the short position in $3k intervals.

‘Add-On’ Trade Strategy:

The blog will sell a third Dec-Nov soy meal (x2)/soybean spread on a close below +$14,690 (premium meal).  If filled, exit all three spreads on a two-day close of $3,000 or more above the entry price of the third spread.

If the third position is entered, sell another Dec-Nov soy meal (x2)/soybean spread on a close $3,000 below the entry price of the third position.  If filled, exit all four spreads on a two-day close of $3,000 or more above the entry price of the fourth spread.

To enter a short position in this spread, sell two 100-ton December soy meal contracts and simultaneously buy one 5,000 bushel November soybean contract.

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