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Charlie Zoosk, CFA
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Research analyst for investment firms located in Chicago and New York.
  • Topic Number 1. Soybeans 0 comments
    Aug 14, 2013 11:18 AM | about stocks: CAT, JOY, AGA, SOYB, CORN, ADZ, JJS, TAGS, USAG, RGRA, JJA, RJA, AGF, DBA, FUD, UAG, DAG

    Hello everyone. My name is Charlie Zoosk, and this is my first blog on SeekingAlpha. I would hope that the users of this site are welcoming and open to my ideas. As a research professional for the last 20 years I see a unique opportunity to add towards the discussion the investment community revels in.

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    Topic number 1. Soybeans

    RECAP: We have seen the game played out again and again. Farmers indicate one thing and the weather or growth yields produce another.

    According to past publications (1) of Soybean cash markets in 2012 we saw record prices of $17.75 near the end of August. This was followed by a zigged drop down to $14.25 and then back to $15.25 near the end of October.

    Variables involved in 2012 market: Drought, and low producing yields.

    INFERANCE: By using the 2012 market as our nearest reference point we see that prices had significant volatility during the drought constrained year. Settling prices ranged between $14.25-$15.25 off of an end crop of 3 billion bushels.

    PRODUCTION COMPARISON: As reported last years production was 3 billion, and this years has been revised downward to 3.255 billion. This equates to an 8% difference.

    Do prices accurately reflect the variables?

    If prices were to accurately reflect the variables, keeping demand on track and China (+1) buying showing the 5th largest purchase in history, we would see a correlating discount from last years reference point.

    CONCLUSION: Taking this reference point, and adjusting for the projected 8%, we see a price range of $13.60-$15.25 over the next 30-60 days. Note we dropped the low but not the high given that demand has shown increase to keep up with production.

    Margins of error have also slimmed with low stock piles currently on-hand.

    Our price estimates are in-line with other market leads who see the rise on these prices to our set ranges. As we get closer to harvest season late planting will also be factored in via a frost premium that may or may not arrive early. Stil too early to tell on the frost timing, but should be a consideration among traders.

    Expect for volumes to increase regularly over the next 10 days.

    PREVIEW FOR NEXT WRITING: Historical Variances with Frost to Price Increases.

    (1) arkansas-crops.com

    (2) USDA, August 12

    Themes: Topic 1 Soybeans Stocks: CAT, JOY, AGA, SOYB, CORN, ADZ, JJS, TAGS, USAG, RGRA, JJA, RJA, AGF, DBA, FUD, UAG, DAG
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