Grain Spreads: Dec 26/Dec 27 Corn

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Commentary

Corn continues to search for a bottom as war premium erodes while planting intentions increase. Funds had previously pushed out to a 300k long but have since pared maybe 80 to 100K of those positions. Still an aggressive long in the market ahead of planting and growing season. Managed funds in prior years have cleaned out their books prior to key yield development time, meaning they liquidate and return back near parity prior to re owning the grain ahead of key yield development time in July. If that premise holds look for further liquidation or unwinding to continue, provided that there are no major planting delays after mid-April. All that being said, we have a major conflict in the Middle East that could foment into regional chaos despite the latest calls for a two-week ceasefire. Not to mention Russia and Ukraine are still firing at each other. I’m looking to buy the Dec 26/Dec 27 corn spread on a dip. The spread closed at 12 cents Dec 26 under. Look to be a buyer at 19 to 17 cents Dec 26 under at a potential double bottom should the spread trade there. 

Trade Ideas

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Risk/Reward

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Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

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