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What Does Option Expiration Mean for Grains?

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Corn: Option expiration is today for the grains, this is something we have been focusing in on over the last week and a half. Roughly 50,000 puts between the 340 and 345 strike that were in the money last week are now next to worthless. There are still another 27,500(ish) at the 350 strike alone. We are not expecting a whole lot of action today but would not be surprised one bit if we saw a bid into the close today; grain markets close at 12:05pm cst. Where the corn trade goes post option expiration will set the tone for the rest of the year. If we do see some follow through momentum next week we will likely see funds cover some of their record short position (weather in South America will be the headline reason). Export sales for corn this morning came in at 1,080,000 metric tons, this is in line with the expected range from 900,000-1,300,000 metric tons.

Soybeans have drifted higher over the last week, settling in our key resistance pocket from 999-1004. This has been a big barrier over the past month, a close above here could encourage additional buying from the funds who have been establishing a net long position. A close above opens the door to 1021 . Historically we have seen the market rally from November 16th-December 28th; 15 of the last 15 years with the average gain being 42 cents. Due to Thanksgiving, the weekly Commitment of Traders report will be released Monday. Option expiration is today but less significant than the corn market. Export sales this morning came in at 869,100 metric tons, this was short of the expected range of 1,000,000-1,400,000 metric tons.

Cattle futures rallied on Wednesday with December live cattle ending the day up 1.225 at 119.05 and January feeders up 1.075 at 152.725. There were 955 head listed on the Fed Cattle Exchange with 119 passed on and no sales. There was a late day cash trade at 120.50 in Colorado, Nebraska, and Wyoming. 117.30 has been our pivot point, this represents the middle of the range from the August lows to the November highs. The market has grinded back towards 119.80 which is another technical indicator as well as previous resistance and the breakout point in October. A lot of people have been calling/emailing in wondering about the direction from here, and that remains to be the million-dollar questions; We feel a consolidation within this range would be healthy for the market.

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Oliver Sloup is Vice President of Blue Line Futures, a leading futures and commodities brokerage firm located at the Chicago Board of Trade. Blue Line Futures mission is to put the customer first, and that means bringing YOU the best customer service, consistent and reliable research and state of the art technology.  Oliver has been a guest on CNBC and Bloomberg, among others.  Oliver has over a decade of trading experience. Prior to Blue Line Futures, Oliver worked as the Director of Managed Futures at iiTRADER.



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