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Commentary
Managed funds are long over 1 million futures and options contracts per the last CFTC release. We have detailed the reasons all summer long. Geopolitical, reduction in yields, increased demand, the three major reasons. Is it priced in, or de succumb to some harvest pressure. We do have the Chinese Premier coming to the Us on the 24th, while lower-level meetings between both countries Secretaries this weekend. But after these take place, harvest will be in full swing. Buy the rumor and sell the fact? It’s also end of month and fiscal quarter. Midterms get closer on the horizon. Funds are long, carry the risk and have the profit in my opinion. The possibility exists they back off and book profit on some positions. This assumes the geo-political situation doesn’t get any worse, which given recent events this week, a big assumption. Beans have the most “meat on the bone” in my view, yields are just shy of 53 and ending stocks are at 310 million. Balance sheet not that tight historically, and I don’t see China making any new purchases aside from the 25MMT they promised last October. Corn has 425K longs, a record position currently. 5.50 Dec corn has been a wall of resistance and harvest is underway. Will see what happens but I’ve laid out some low risk/high reward positions into 2027. These are just a few ideas I have; we can adjust strikes and months. My door is always open for a conversation. I just don’t see us staying at present levels heading into month end and early October.
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March 27 soybeans Aggressive
Buy the 12.00 puts for 8.4 cents.
Sell the 11.90/12.00 call spreads for 8.4 cents.
Cost to entry even money
Floor under 12.00 soybeans until late February
Max risk $500 plus commissions and fees.
Margin $452.00
Conservative
Buy the May 2027, 1150, puts for 5 cents
Cost and risk are $250 plus commissions and fees
March 27 Corn
Buy the March 5.00 puts
Sell the 4.90/5.00 call spread
Collect 1 penny or $50 upon entry less commissions and fees.
Floor under 5.00 corn until late February
Max risk is $450.00 plus trade costs and fees,
Margin -$440.00
Conservative
Buy the May 480, 2027, puts for 6 cents.
Cost and risk are $300 plus commissions and fees.
Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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Walsh Trading
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