1/17/25 – The Art of the Hedge
.
If you would like to receive more information on the commodity markets, please use the link to join my email list Sign Up Now
.
.
The Cattle Markets were mixed today, with the Hogs down another buck. The Fats had a slight gain today. February’25 Live Cattle was 15 cents higher today and settled at 196.75. Today’s high was 197.87 ½ and the 1-month high is 199.10. Today’s low was 195.87 ½ and the 1-month low is 186.27 ½. Since 12/17 February’25 Live Cattle are 7.00 higher or more than 3 ½ %. The Feeders had a small gain as well today. March’25 Feeder Cattle were 32 ½ cents higher today and settled at 268.05. Today’s high was 269.10 and the 1-month high is 271.00. Today’s low was 266.05 and the 1-month low is 254.00. Since 12/17 March’25 Feeder Cattle are 9.77 ½ higher or almost 4%. The Hogs gave more back today. February’25 Lean Hogs were 1.17 ½ lower today and settled at 81.12 ½. Today’s high was 82.30 and the 1-month high is 86.07 ½. Today’s low was 80.85 and the 1-month low is 78.45. Since 12/17 February’25 Lean Hogs are 2.07 ½ lower or almost 2 ½ %. The Livestock Markets have been moving higher for a while but were put in check yesterday. Today the contract months in the Fats and Feeders were mixed without a major price movement in either direction. The Funds are still long the February’25 Cattle and have been rolling into the April’25 Contract Month. The remaining open interest in the February’25 Contract more than 69,000, and the in the April’25 Contract it is over 155,000 now. The trading volume today was close to equal with February’25 trading more than 22,000 contracts and April’25 trading more than 23,000 contracts. We will see what the Funds decide to do with the second half of their long February’25 contracts, on Tuesday next week after President Trumps inauguration. If the Funds don’t like what they hear on Monday, it could be a fire sale. The February’25 Fats have traded as high as 199.10 this month, and maybe that is high enough, we will see. This week February’25 Fats are down $2.02 ½. I still like the 186.50 level for the February’25 fats for all the same reasons. The Feeders look like they are in a holding pattern and are looking heavy again. The Cattle on Feed Report is next Friday on the 24th, and I have heard some large estimates. I heard the Cattle on Feed could be 101% and Placements at 106%, with Marketings at 103%. Next week and the following Monday could be interesting after President Trump takes office, and then a possible Bearish Cattle on Feed Report. I still like the 255 Level in the March’25 Feeders, and the February’25 Hogs are getting back toward that 80.00 level quickly.
.
.
If you would like information on opening an account, please use this link Sign Up Now only 5 account pages need to be signed.
.
.
The Grain Markets were all higher today. The Beans regained some ground today. March’25 Soybeans were 15 cents higher today and settled at 1034. Today’s high was 1039 and the 1-month high is 1064. Today’s low was 1019 and the 1-month and 52-week low is 947. Since 12/17 March’25 Soybeans are 55 ¼ cents higher or more than 5 ½ %. The Corn Market rallied higher again today. March’25 Corn was 9 ¾ cents higher today and settled at 484 ¼. Today’s high was 485 and that is the new 1-month high as well. Today’s low was 474 and the 1-month low is 435 ¾. Since 12/17 March’25 Corn is 40 ¾ cents higher or more than 9%. The Wheat Market was slightly higher today. March’25 Wheat was 1 ¼ cents higher today and settled at 538 ¾. Today’s high was 542 and the 1-month high is 554 ¾. Today’s low was 533 ¼ and the 1-month and 52-week low is 526. Since 12/17 March’25 Wheat is 6 ¼ cents lower or more than 1%. The Corn and Soybeans have been flying all over after the WASDE Report last Friday. I still feel the Beans are a sell here. China has been stockpiling Soybeans for a year, and there could be tariff problems after Monday’s inauguration. China has already started buying Brazil’s new Soybean crop that is starting to be harvested. It is going to be a big crop, and China will try to phase out buying US Soybeans if they can anyway. Right now, a record crop is still expected out of Brazil, and US exports do not look good. Argentina looks like it will get some needed rain soon, and that should help stabilize their crop as well. I think we can see the Beans head South again next week. The 100-Day moving average is 1020 ½ now, and that is where the broke to and paused for a while yesterday. I feel we can see the March’25 Soybeans trade to that 1020 ½ level and then toward the 1000 level, with a pause around 1005 ½. The Corn Market was very strong today, and I expect that to end soon. March’25 Corn made another 1-month high today at 485 and closed near the high as well at 484 ¼, but I still don’t feel the Market is ready for 500 Corn. I think we can see a pull back toward the 450-460 range shortly. The Wheat Market is still a joke, but who knows what is going to happen in the world next week. I would rather be long than short and feel the 580 level would be the first level to reach if it were to rally. If it does take off, 575 ¼ is the 100-Day moving average, and 608 ¼ is the 200-Day moving average. There are Soybean Hedge examples below, in the March’25, May’25 and September’25 contract Months, to show you what is possible with the current prices. I can structure a hedge for you based on your specifications, just ask. Have a great weekend.
.
.
Today’s Brazil Weather Radar Map Below.
.
.
.
.
Soybean Hedge Levels in March’25, May’25, and September’25 Below.
.
There are several ways to Hedge in the Option Markets and I will show you a few examples of that below. The first example is simply buying a put. That would lock in a bottom price, cost, and limit risk at the same time, if the markets were to break. It is also safe from a margin call. The most you could lose buying a Put is the cost of the premium for the Put you purchased, plus fees and commissions. The second example is a Put spread. With a Put Spread you are still buying a Put, but you are selling one of lesser value as well. You can use a Put Spread to lock in a profit on the difference between the two Put Strikes if the Market were to break. It will also limit your loss, but it will cap your potential gain on a break as well. The third example has more risk, selling Calls and buying Puts, and could potentially expose you to a margin call if the Market were to rally through the Strike price of the Calls you would be selling. The reason to sell calls or sell multiple Calls is to finance purchasing the Puts. If the Market were to break, you would be profitable on the Calls you sold and the Puts you purchased, but again it comes with more risk. Please call me if you have any questions.
.
.
.
.
.
.
.
.
.
If you would like to receive more information on the commodity markets, please use the link to join my email list Sign Up Now
.
.
.
Thank you to all of my old and new Customers. I appreciate your business. To those of you that are close to opening an account, please call me if you have any questions, and I look forward to working with you soon. To anyone thinking about opening a Hedge or Trading account, give me a call and we can talk about it.
.
.
Newest Walsh Gamma Trader Link Walsh Gamma Trader
.
-Bill
I have market commentary and option charts in
Pure Hedge – Livestock
Pure Hedge – Grain
Call for specific trade recommendations.
Email me for free research.
Bill Allen
Senior Account Executive
Direct: 1 312 957 8079
WALSH TRADING INC.
311 South Wacker Drive
Suite 540
Chicago, Illinois 60606
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.