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TIGER ON SPREADS
P.O. Box 64401, Chicago, Illinois
800-368-5958

(March 18, 2002) SOYBEANS: The soybean complex has also been suffering from a lack of interest and has been chopping around in a trading range albeit with a modest bullish bias. Seasonal factors favor a low by mid March. However, with the South American crop getting bigger on each estimate, and few if any problems yet apparent for Northern hemisphere crops, there is little to generate any bullish enthusiasm at this early date. Bean spreads have been steady/weak. The old-crop July/new crop November soybean spread has been wallowing between 3 and 6 cents November premium. A rally back to a July premium is probably in late spring and now that the February break is over, some stability might be expected. Hold the two units of the forward spread and be prepared to add a third unit soon. Crush spreads have stabilized at a good level--above 60 cents products premium--though well off the highs. One should not expect much further weakness but neither should one expect great strength in the period just ahead.

Soy oil spreads remain weak. This is reasonable in view of stocks in excess of 2 billion pounds. Don't look for further weakness, but don't expect much strength either. Carrying charges (approximately 16 points/month) limit the risk in the oil spreads. Meal spreads displayed seasonal strength into January, but then weakened as expected. Profits were taken on the long July/short March meal spread (from near 400 March premium) on March 4 at 180 points March for a nominal 200 point gain. Begin watching the July/December meal spread for a forward spreading opportunity in the period just ahead. Stand aside in the oil/meal spreads for now.

 

Phil Tiger

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