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Commentary
Managed funds are long over 1 million futures and options contracts in the grain complex 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 do they succumb to some harvest pressure? We do have the Chinese Premier coming to the USA on the 24th, while lower-level meetings between both countries Secretaries happened last 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. We have a quarterly grain stocks report on Sep 30 and then 10 days later a WASDE report form USDA on Friday October 9th. 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 take 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 is not that tight historically in my opinion, 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.
March 27 Soybeans Conservative
Buy the 12.00 puts for 7.6 cents.
Sell the 11.90/12.00 call spreads for 8.6 cents.
Collect 1 penny or $50.00 upon entry less commissions and fees.
Floor under 12.00 soybeans until late February
Max risk $450 plus commissions and fees.
Margin $442.00
Aggressive
Buy the January 13.00 puts.
Sell the 1260/1300 call spread
Cost to entry even money plus commissions and fees
Maximum risk-2k plus trade costs and fees.
Margin $1604.
March 27 Corn Conservative
Buy the March 5.00 puts
Sell the 4.90/5.00 call spread
Collect 2 cents or $100 upon entry less commissions and fees.
Floor under 5.00 corn until late February
Max risk is $400.00 plus trade costs and fees,
Margin -$440.00
Corn Aggressive
Buy the January 540 puts for 17 cents.
Sell the July 27 610/550 put spread for 40 cents.
Collect 23 cents upon entry less commissions and fees.
Max risk is 37 cents or $1850 per plus trade costs and fees
Margin $673.00
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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
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