V. 19:5 (32-33): Seasons In Soybeans by Scott Barrie
Product Description
Tracking Risk Premium
Seasons In Soybeans
Year after year, the Earth turns around its axis, producing trading opportunities you can exploit with technical tools. by Scott Barrie
Seasonality and technical analysis can be a powerful combination. Traders who understand the natural supply and demand cycles in the commodities markets can anticipate market turns more precisely, helping them isolate good trading situations and avoid poor ones. Here’s a practical application: tracking risk premium in the soybean market.
Soybean prices change based on the perception of future supply. The amount of change is called risk premium. When future supply is perceived to be limited, futures markets tend to build risk premium into prices; thus, prices are higher than would be expected based on present supply and usage patterns. As the perception of future supply becomes clearer, prices return to a lower level more consistent with supply and usage patterns.
Year after year, the Earth turns around its axis, producing trading opportunities you can exploit with technical tools. by Scott Barrie
Seasonality and technical analysis can be a powerful combination. Traders who understand the natural supply and demand cycles in the commodities markets can anticipate market turns more precisely, helping them isolate good trading situations and avoid poor ones. Here’s a practical application: tracking risk premium in the soybean market.
Soybean prices change based on the perception of future supply. The amount of change is called risk premium. When future supply is perceived to be limited, futures markets tend to build risk premium into prices; thus, prices are higher than would be expected based on present supply and usage patterns. As the perception of future supply becomes clearer, prices return to a lower level more consistent with supply and usage patterns.
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