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Commentary
Corn traded both sides of unchanged but ended up down in the front month (July 25) off of longer-term forecasts of dry weather for the western corn belt and hopes that Chinese trade talks could mean better export demand in the new crop. China and the United States will hold high level trade talks this weekend in Switzerland. Both sides essentially say that they’re responding to requests from the other to talk, but that’s okay as long as they’re talking. U.S. Treasury Secretary Scott Bessent and U.S. Chief Trade Negotiator Jamieson Greer are expected to meet with China’s economic tsar He Lifeng to begin the talks. July Corn lost 6.2 cents while December lost 0.6 cents today. July/Dec 25 corn spread continues to get pounded as Argentinean corn harvest advances, with Brazil secondary corn harvest coming soon. Demand for old crop up to this point continues to exceed expectation, but as futures are a forward-looking mechanism, the trade may anticipate that demand retreats as South American origin comes online. I think if one wants to belong, one devise strategies to be long new crop. That’s where uncertainties lie as weather long term is an unknown while at the same time, we could see trade deals that if realized could increase demand for new crop and knock down ending stocks. The average trade price for December corn futures in February 2025 was $470.0. The average price during the month of February is important in my view as its sets the insurance guarantees for U.S. farmers for the upcoming crop season. On April 16th, Dec 25 corn hit 469.4. Since at least 1973, December corn has never failed to return to its average price at some point after February. In my opinion, the high made in mid-April we be revisited if not surpassed. Trade Idea below.
Trade Ideas
Futures-N/A
Options-Sell the Dec 25 Corn 5.30 vs 4.50 put spread for 62 cents. Then use the credit to buy the Dec 450 call for 26 cents. Package the spread for a collection of 36 cents. ZCZ25C450:P450:530[3P]
Risk/Reward
Futures-N/A
Options-The maximum risk is 44 cents or $2200 plus all commissions and fees. I would risk no more than 15 cents upon entry using a good to cancel stop loss at 51 cents on the three way. Risk then is $750 plus commissions and fees. I’m looking for December corn to challenge at least 4.70 and then potentially run to the 5.02 area on increased demand, and possible weather hiccups. (dry hot Summer potentially)
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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