Please join me this Friday at 2pm Central for a free grain webinar. We discuss supply, demand, weather, and the charts. Sign Up Now
Commentary
National corn condition ratings rose a point this week to 72% good/excellent, even with last year but above the 67% five-year average; emergence of that crop rose from 87% to 94% complete, up from 92% last year but even with the 5YA. The Iran-Israel war is now in its fifth day. Two oil tankers collided and caught fire today in the Strait of Hormuz, through which a fifth of the world’s oil exports flow. It’s thought that the collision may have had something to do with all of the electronic interference tied to the military activity in the region, but the Strait thus far remains open. Oil and fertilizer production in the region is the primary concern from a commodity standpoint in my opinion. The vast majority of Iran’s fertilizer production has been taken offline, with the same true for most of Egypt’s production as well due to the shutdown of natural gas output in Iran and Israel. Israel demands that Iran’s nuclear program be dismantled, and Iran thus far refuses to do so. With that the war continues. I’m looking at Dec25/Dec 26 corn futures spread as an opportunity. We have a big report at month end, planting intentions. Sizable acreage increases have been priced in for corn from the March planting report. Since there weren’t any planting delays of any size or scope, there hasn’t been much of a reason for any acreage adjustment at month end. That said the month of July is the key yield development time. It’s definitely getting warmer, but the warmth has been accompanied by rain. Ideal condition in my view but is always subject to change in a NY minute. I think the continued escalation in both Ukraine and Iran, unknown weather in July/August, and managed funds heavily short are reasons to consider the futures spread.
Trade Ideas
Futures-Buy the Dec 25/Dec 26 corn futures spread at 32 cents Dec 25 under.
Options-N/A
Risk/Reward
Futures-If filled at 32 cents under, risk 5 cents on a GTC Stop at -37 cents. This puts the maximum risk at 5 cents or $250 plus commissions and fees. My target is at parity or the March 11th high on this spread to exit for a 32 cent gain less trade costs and fees.
Options-N/A
If you would like to receive more information on the commodity markets, please use the link to join our email list Sign Up Now
Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
312 957 8103
888 391 7894 toll free
312 256 0109 fax
Walsh Trading
311 S Wacker Drive Suite 540
Chicago, Il 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.