Corn, Beans, and Wheat have succumbed to seasonal type selling as funds have sold rallies amid weak demand, and lack of a sizable weather scare. It’s not to say we don’t have issues in the US and abroad that could reveal lower crop sizes down the road. For now though the markets probably take a wait and see approach. Corn and Bean ratings barely moved from last week but I sense that needed weekend rains that showed up in many areas of the Midwest over this past weekend through Monday night have withered away any near term thoughts of drought. Having said that as we turn the page to August, weather events during this most important month that in my view will make or break the corn and bean crop. Until then we have the August 12th report that could give us a more realistic view of what was actually planted. After that release the market will receive private estimates on production and yield. Near term weather looks drier in the 1 to 5 and 6 to 10 day forecasts, but with mild temperatures and without any heat domes. We are still supply side driven in my view, and there are still some questions needed to be answered here. So in my view I think you will see some evening up ahead of the August 12th report. We have seen sizable longs in corn for instance liquidate the last two weeks. I think moving forward that the selling into the report will subside and that the net short in the soy complex will cover some positions ahead of Aug 12th and in front of key yield development time, the month of August.
Game Plan:
Corn is pulling back to the 38 percent retracement level basis December Corn near 420 from the yearly high. Half-way back is near 4.05. Beans are below 9.00 and the condition ratings for now aren’t too impressive at just 54 percent good to excellent. Yet not much demand for either grain. Without a continued weather issue, the market has seen puil backs, to retracement levels and areas of support. Use Oct options going into the report. We should see short covering into 8/12.
Oct corn 440-480 call spreads for 6.4 cents 325 risk plus commissions and fees.
Oct bean 920-970 call spreads for 7 cents or 350 plus commissions and fees.
If filled at our price, I would put some offers at 13 to 14 cents and the remainder at 20 cents minus all commissions and fees. On top off risking 3 and 3.4 cents per spread once filled using a stop loss on the spreads. Low risk, good reward in my view. I think the crops are going to need optimal weather conditions through August to achieve good yields due to the late plantings. Having said that, we have had optimal growing conditions the last few weeks in most areas of the Midwest. We will see if it continues. Call or email me with any questions at 888 391 7894 or slusk@walshtrading .com I hold a free grain and livestock webinar every Thursday at 3pm. Signup is free and a recording link will be sent upon signup. Sign Up Now