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Grain Spreads: No Fear


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"There's too much of everything" and "rain makes grain" have been the bearish theme's in grain and livestock this Spring. A shift in market psychology is needed for the Bulls to regain some semblance here or it will be only a matter of time until we see Corn with a $2 handle and Soybeans with a $7 handle in my view. Funds are heavily short corn but are neutral the soy sector, long beans and short meal and oil. Their wheat positions lack conviction on either side and are near neutral as well. The fight to stave off deflation has taken its toll on both the grain and livestock sectors. Supply bottlenecks have hurt many producers as futures prices for grain and meat plummet. At the same time, prices for pork and beef are rising at the grocery store. There are winners in this Covid economy with one being the meat packer. In my view they are making money hand over fist in both sectors, aided by the USDA data that tells us we have to much of everything now, with more coming in the months ahead. Corn will be over 80 percent planted, with Soybeans just above 60 percent come Tuesdays crop condition report. Wheat still needs to finish and then be harvested. There is time for Mother Nature to present issues with future production and create fear, which could create a bid in the market. So far though there isnt much fear. We have witnessed weather threats before stoke a fear or unknown induced supply side rally. In my view there are discounts all over the Board going out to early 2021. Ive been previously commenting that if one wants to go long or take a shot a buying some previously seen levels using options, our view is to utilize longer term deferred months. No trade recommendations this week.

Please join me next Friday May 29th at 2pm for a free grain and livestock webinar. We discuss supply, demand, weather, and the charts. Signup is free and a recording link will be sent to your email. 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

53 W Jackson Suite 750

Chicago, Il 60604


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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
  • CCTV.com

 

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