Soybeans ripe for option writers

摘要

While option selling can certainly contain an element of risk, there is no more risk in selling a naked option than in taking an outright futures position if it is not done haphazardly. In most market conditions, there will be somewhat less risk than positioning in the outright contract. One such condition currently exists in soybeans. Soybean fundamentals are taking on a more bullish tone. This is despite the talk of the upcoming South American harvest. Indeed, there is record acreage planted for this year and yields are expected to be strong. However, world demand has set new records for the last three years. Demand from China and its Asian neighbors has been voracious as those nations' economies and infrastructures continue to improve. U.S. exports for 2002-03 are well on pace to eclipse the U.S. Department of Agriculture's (USDA) 930 million bushel estimate. With U.S. 2002-03 ending stocks projected to remain under 200 million bushels, and a stocks-to-usage ratio that is historically tight, it appears a bumper South American crop will be necessary to keep prices in their current range.