Grain Spreads: Simplicity

Sean Lusk General Commentary Leave a Comment

I’m going to keep it short and to the point today. A couple very short term bets and long term view on grains with some inexpensive trades that to me make some sense.

Corn : Reasons for rally:potential Bullish Seasonal (April-June). 200 K shorts in market according to COT data and recent open interest. Is China buying on trade deal? Possible US planting/growing season issues. Late El Nino damage to secondary corn crop in Brazil possibilty.

DEC 19/DEC20 Corn

All these scenarios may come in or perhaps none will develop. As we near month and quarter end along with planting intentions data being released, the path of least resistance maybe higher due to short covering alone. On that premise buy the April 365 call for 4 cents OB, and look for the exercise into May futures into the report. See chart: Dec 19/Dec 20 futures spread. Buy between 15 to 18 cents under. Stop at 22.4 under. Projection to 3 over Dec 19 futures. Potential to 25 to 30 over.

Soy meal: 40 K shorts as of last CFTC. Fundamentals are bullish due to massive ending stocks for beans. The ending stocks story is long in the tooth. This market is holding the 3.00 level and while it sits under major trend line support (blue arrow on chart) ,won’t break. Again if it holds in here, shorts may pitch it at month and quarter end or ahead of the quarterly stocks report on 3/28. Cheap call strategy:

weekly meal

May 320’s for $150.00 or July 330 call for $320.00. July futures under 306, you should be out the July calls. Both are cheap bets, where the risk is so far greater than the reward, call me with questions. 888 391 7894 or email me

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