Soybeans 2014 Review

zsx14This has been a very interesting year for soybeans. While I’ve done a fair number of trades for soybeans, this post will focus on the main trade which was to sell the SX14 (Soybeans November 2014) contract short. I made a total of 26 round trip transactions for this contract from June to October 2014.

A good friend of mine told me that the planting season had gone very well and it was expected that there would be a bumper crop during the harvest in 2014. Hence, selling SX14 short would be a good trade. However, since I’m not so close to grains as I wish, I was a little hesitant so most of my trades were short sales before USDA report releases. I also sold short SX14 when it broke $10, seeing that as a very bearish signal.

In hindsight, it would have been a much better trade to keep a short position in SX14 and adding to the position before every potential catalyst such as the USDA report release. An epic error I made was during the June report. The report announced that soybean acreage was 3 million acres more than previously thought. The market absolutely plunged and there was follow through selling throughout the session. In fact, SX14 started drifting much further down over the next few days and never went back to the level when the announcement first came out. Since I was unfamiliar with the existing situation, I didn’t have the confidence to be so aggressive and so missed most of the move and left most of the money on the table.

Having said that, shorting soybeans have been another source of profit for me this year.

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