Please join me every Thursday for a free grain webinar. We discuss supply, demand, weather, and the charts. Sign Up Now
Commentary
Much of today’s trade focused on developments in the US/Iran war, including what may be an end to the conflict. Iran has indicated it may allow vessel traffic to resume if the US suspends its blockade. This talk generated profit taking in the energy complex as it gave the first legitimate hope of product movement since the war started. That said, several details still need to be settled before anyone will feel comfortable sending a vessel into the region. This news directed managed money away from several markets and into the equities today.
Wheat was not immune to the washout started by the crude oil market but had more weather factors that influenced market action. The forecast for the next 10 days has winners and losers with Kansas and Oklahoma benefitting the least if they benefit at all but the rest of the winter wheat belt is set up for something. There were some midday models that played with rain chances for the KS/OK area but those are 7 days out or beyond. This led to the CME contract in full retreat while the KC contract bought the dip for the second day in a row. Options idea suggested below because I don’t see the market trading near the 7.00 handle in September wheat for much longer. The next leg up could take the market near 7.40 in my opinion. Still friendly as production losses are still an unknown, while geopolitical issues continue to rage.
Trade Idea
Futures-N/A
Options-Buy the August 750/850 call spread for 14 cents or $600 or better.
Risk/Reward
Futures-N/A
Options. The risk is the price paid for the option spread plus trade costs and fees. Risk 7 cents upon entry or approximately $350 plus commissions and fees. Work an order to exit at 36 cents, for a gain of 29 cents less trade costs and fees.
If you would like to receive more information on the commodity markets, please use the link to join our email list 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
311 S Wacker Drive Suite 540
Chicago, Il 60606
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices.PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.
