Grain Spreads: Corn Noise

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Commentary

The Trump administration followed up with an announcement on Sunday that the US would selectively blockade the Strait of Hormuz itself. The US plans to halt economic and military traffic that supports Iran, while it “will not impede freedom of navigation for vessels transiting the Strait of Hormuz to and from non-Iranian ports.” In addition to screening vessels, the US Navy will proceed to clear any mines in the Strait and sink any aggressive ships.  President Trump also declared that China would face an additional 50% tariffs if it is found to be trying to resupply Iran with weapons. Crude oil jumped nearly $9/barrel but moderated by the end of the session. The USDA inspected 70.2 million bushels of corn for export shipment in the week ending 4/9, coming in toward the top-end of the estimated range as demand for U.S. corn exports remains red hot. Cumulative corn export inspections in the ‘25/’26 marketing year total 1.977 billion bushels, up 33.9% year-on-year and easily representing an all-time high for this point in the year, keeping us comfortably ahead of the seasonal pace needed to reach USDA’s record 3.300-billion-bushel export target. Despite the noise from the war and insatiable demand, rallies keep getting sold into for corn. Managed funds pushed out to a 300K contract long but have shredded maybe 30% of that length, with a net long approximately at 180K. Today was day 4 of the Goldman roll. We are looking to be a buyer here after the roll. Trade idea below.

Futures-Buy the July26/Dec 26 corn spread at 20 cents July 26 under.

Risk/Reward

Risk no more than 6 cents or $300 plus commissions and fees by placing a stop on this spread at 26 cents GTC.  It is my opinion that this spread can retest the early January highs. 

Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

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