Please join me every Thursday for a free grain webinar at 3pm Central. We discuss supply, demand, weather, and the charts. Sign Up Now
Commentary
Kansas City wheat closed with buyers active on the close pushing values up over 10 cents on the day while Chicago finished up 5 cents. The action shows the unknown in the Black Sea will keep breaks supported for now. However it was Spring wheat led the market with double-digit gains as forecasts continue to run drier in the upper Midwest, which could lighten production totals, especially following the triple-digit temps the past week. Yesterday’s crop conditions resulted in a 5% decline in the good to excellent category with ratings declines most likely next week. After the big drop in acreage this season across a majority of the wheat classes, the last thing the market needs is a significant drop in spring production. No change in the Black Sea. Russia has banned ships from anchoring in areas unprotected from air defenses in the Azov Sea grains trade route. Multiple firms have refused to send ships to other Russian ports due to the risk of attack. Per Pro Farmer, sharp increases in Russian wheat export values were understandably seen over the last week with IKAR penciling 12.5% protein Black Sea
export values for August shipment at around $235/tonne fob, up $7/tonne from the previous week, while Sovecon sees values even higher at $238-$241/tonne, up $11/tonne from a week earlier. Shipping/insurance costs for the region have also surged of late given the increased back and forth attacks on vessel and port infrastructure in the Black Sea and Azov Sea. The path of least resistance remains higher for wheat in my view.
Trade Idea
Options-With funds still short Chicago wheat, please consider the following trade.
Buy the 7.00/7.50 September wheat call spread for 10 cents or better.
Risk-the max risk is 10 cents or $500. We suggest putting a stop loss at 4 cents GTC which risks $300 plus commissions and fees.
Offer to exit the spread at 35 cents for a gain of 25 cents, less trade costs and fees.
If you would like to receive more information on the commodity markets, please use the link to join our email list Sign Up Now
Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
312 957 8103
888 391 7894 toll free
312 256 0109 fax
Walsh Trading
311 S Wacker Drive Suite 540
Chicago, Il 60606
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices.PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.