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Grain Spreads: Corn/Bean into Report

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Bean and Corn Game Plan Long Term

I think its time to consider we sell a few put spreads either in July 2020 Beans or Sep/Dec 2020 Corn.

These take in sizable credits and can be used to finance puts for in the next 90 to 120 days.

July 2020 Soybeans

Sell the 10.00/11.00 July 20 put Spreads at 88 to 90 cents into the report collecting $4400/4500.00 per spread. You have ten to 12 cents of risk as a spread plus commissions and fees. At option expiration these max out at 1.00. If I sell at 88 cents, the max loss as a spread would be 12 cents.

Spread settled at 87 cents today.

We can use the collections for a host of trades, either near term puts and long-term call spreads to average our trade out.

I have a circle drawn at the 848/840 area this week. Should we hold here, we could see a near term rounded bottom on the weekly chart.

Underneath the drawn circle and arrow, a close under it and its katy bar the door down in my opinionand I would be out of this position. So in my view sell the spread at 88 cents. Use the credit to buy a January 860/820 put spread for 10 cents. This gives the July puts protection.

Note: In looking at volatility today, the October 850 soybean put traded almost 4K times. A sizable amount of volume and open interest one day ahead of tomorrows 11 am WASDE report. This serial option expires next Friday 9/20/19.

Dec 20 Corn

Warm and Wet has continued into September so far and that is seen as friendly for development. Still who knows whats actually been put in the ground for corn? The USDA has been too optimistic in my view so far, but on the flip side, where is demand? Good weather and low demand are not friendly for price, and in my view the charts have told the story. However the trade is going to get a real education on yield and production this year. Approximately 40 percent of the nations corn was planted in mid to late June. Its 4 to 6 weeks later than normal depending on the area. This weeks three percent reduction from 58 to 55 in the good to excellent condition for corn has given shorts which have amassed a 123K short in the market a reason to cover ahead of tomorrows report. Second biggest producer Illinois dropped 8 points in one week for corn and 6 points for beans. The condition reports overall detail a potential worsening condition in the Eastern Belt. We have a long way to go here and until we to the November report, supply side fundamentals will be the primary price driver.

If you think the late planting problems will result in lower crop sizes and problems when harvest arrives in October and November, consider the plan here. Look to sell a longer term put spread to finance a cheap put strategy to protect the remaining downside. I think at these levels we are potentially closer to the bottom than the top.

Sell the Sep 2020 5.00/4.00 put spread for 82 cents. Or Sell the Dec 20 5.00/4.00 put spread for 78 cents. Use the sizable collections to finance a Dec 360/330 put spread for 7 cents.

Please join me every Thursday at 3pm Central for a grain and livestock webinar. We discuss supply, demand, weather, and the charts. Speculative and Hedge gameplans are given. or 888 391 7894.Sign Up Now

Sean Lusk

Director Commercial Hedging Division

Walsh Trading

312 957 8103

888 391 7894 toll free

312 256 0109 fax

Walsh Trading

53 W Jackson Suite 750

Chicago, Il 60604

Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.

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About the author

Sean Lusk is a registered commodity broker and Director of the Commercial Hedging Division of Walsh Trading in Chicago. Sean began in the business as a runner on the trading floor during summer breaks from college in 1993. Upon his graduation from Southern Illinois University at Carbondale in 1996, Sean began his career on the trading floor of the Chicago Mercantile Exchange (CME). Overseeing billions of dollars of transactions working as a clerk in the Eurodollar pit, Sean took the next step and became a floor broker and member of the CME in 2003. He handled customer orders for banks and investment houses from all over the world from inside the Libor pit at the CME.

Now, at Walsh Trading, Sean utilizes his experience in the marketplace and his professional client service skills to aid and assist customers in their trading endeavors.  

He writes daily and weekly commentaries focusing on both the Precious Metals and Agricultural Markets along with related market activity.

Sean has been quoted in various media outlets discussing futures markets. 

These include:


  • Futures Magazine
  • Reuters
  • Forbes
  • Kitco
  • Nikkei Press


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