Commentary
Beans and corn futures for new crop delivery traded sideways today. The overnight rally faded by this AM which was then followed by a double-digit dip in price. However, weather forecasts that are contradicting each other that bring much needed rains in and out of the grain belt haven’t verified yet. Just too many unanswered questions right now for yield and production as the USDA this afternoon dropped condition ratings for corn 6 points and soybeans 5 points on the good to excellent category. These ratings are very subjective, meaning a good rain event can raise ratings 6 to 10 points on any given week. That said the rains haven’t verified yet, so the path of least resistance is higher. I still feel that any significant rallies are welcome hedge opportunities for the producer. Corn option idea below. Keep in mind November beans have rallied $2.34 from the May 31st low to last night’s high. December Corn has rallied 1.19 in the last 30 days. In my opinion the rains need to verify to give the feeling that the worst is behind us as far as condition ratings are concerned. Should they be spotty and miss out of key growing areas, look for new highs in my opinion.
Trade Ideas
Futures-N/A
Options-Buy the December Corn 550 put and sell the Dec 23 corn 7.00 risk reversal for even money.
| ZCZ23C700:P550[RR] |
Risk/Reward
Futures-N/A
Options-This trade is for Producers Only! Unlimited risk here. If one produces corn, this trade makes sense in my opinion on a small percentage of one’s production.
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