Commentary
Wheat markets settled well off their lows even though values traded lower much of the day session, but values did poise a nice recovery settling well off the lows with Minneapolis wheat finishing higher. The reason for the weakness seemed to be mostly positive talk surrounding the continuation of the grain corridor deal with no contradictions being reported from Moscow. For those keeping score we are $1.00 off of last week’s highs that was driven in part by Putin’s comments about restructuring the deal. Since then, the Russians have reignited their attacks in Ukraine targeting the populace with missile attacks as well as grain storage facilities. In my view watch what they do instead of what they say. Russia has destroyed nearly a third of Ukraine’s power stations over the past week in an apparent attempt to set up a miserable winter for Ukrainian citizens. Ukraine authorities claim that Russia hit water infrastructure as well. A Russian drone strike hit storage facilities at Mykolaiv on Sunday night, setting sunflower oil contained in the structures on fire. It is my belief that one be skeptical here on this grain deal or pathway remaining for much longer. With that in mind consider the following trade.
Trade Ideas
Futures-N/A
Options -Sell the July Kc wheat 12.00/11.00 put spread for 82 cents OB.
Risk/Reward
Futures-N/A
Options-The maximum loss on this trade is 5K. But one is collecting $4100 upon entry if filled at 82 cents. The maximum loss on this position is $900.00 plus all commissions and fees. I would risk approx. 10 cents from entry here placing a GTC stop at 92 cents. An approximate risk here is $500 to $550 plus commissions and fees.
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