Soybeans are Expensive and Overbought

Soybeans have been on a run-up since early August sparked largely due to increased buying out of China. However, a quick look at a weekly chart shows that the commodity has reached levels not seen since January 2017 and then again in March of 2018. In addition, Confidence of Trader (COT) data indicates a massive overbought position which has been sustained for several weeks now.

While Soybeans may eventually continue its' trek higher, I look for a correction over the next several weeks while it digests its recent gains, and we enter a seasonally weak period. The Soybean (F21-N21) calendar spread has hypothetically profited in 14 of the last 15 years when sold on 10/27 and bought on 12/18. The average profit is $478 which is 107% of the average drawdown. I suggest a limit of selling this calendar spread of $22.00.