Soybeans
Soybeans had a weak start to the day but worked higher the rest of the day, closing down 2 ¼ cents at 1161 ½ in the July contract. March was down 2 ¾ cents to 1134 ½. There was some profit taking in soybean oil today, but soybean meal continues to rally. Yesterday’s exports were 281k mt, which was a marketing year low and below last week’s sales. China is considering an additional 8 mt in purchases after already completing the 12 mt target. There was a flash sale yesterday of 108k mt to Egypt. CONAB estimates Brazil’s production at 177.98 million mt. Despite the gigantic volume and strong charts on all chart timeframes, I’m not convinced there will be another major leg higher from here. The USDA did mention in the February WASDE report additional Chinese purchases would likely shift exports toward China and away from other markets. Brazil’s soybeans can be bought at a significant discount to US soybeans, and Brazil is harvesting a record crop ahead of schedule. China already made a political move to buy US soybeans at a premium. It seems more likely to see China buy from South America and increase purchases again from the US at a lower price later in the year. I believe this is a second chance to hedge your soybeans, or catch a break in the market with a protected options strategy.
Corn
Export sales for corn were strong yesterday. Exports came in at 2.0 million mt, which was above the range of estimates. Downside for corn is likely limited because of strong exports. If corn goes higher, the 450-455 area will likely be strong resistance in the March contract. That’s the high from the previous move. I like selling a straddle with a range of 471 – 409 in the July contract.
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JULY ’26 SOYBEANS
1161 ½
SELL 1 JULY’26 1250 CALL 15.00
BUY 1 JULY’26 1350 CALL 7 7/8
BUY 1 JULY’26 1080 PUT 15 6/8
SELL 1 JULY’26 1030 PUT 4 5/8
PRICE: 4.00
COST: $200.00/TRADE PACKAGE, PLUS FEES AND COMMISSIONS.
JULY’26 SOYBEAN OPTIONS EXPIRE 6/26/26 (133 DAYS)
MAXIMUM LOSS: LIMITED
This trade is selling a call spread and buying a put spread.
JULY ’26 CORN
449 ½
SELL 1 JULY’26 440 CALL 16 ½
SELL 1 JULY’26 440 PUT 14 ½
PRICE: 31.00 CREDIT
COST: $1,550 CREDIT/TRADE PACKAGE, PLUS FEES AND COMMISSIONS.
JULY’26 CORN OPTIONS EXPIRE 6/26/26 (133 DAYS)
MAXIMUM LOSS: UNLIMITED
If July’26 Corn Expires within the straddle range, you would collect all of the premium sold, 31 cents or $1,550/Trade Package, Plus Fees and Commissions. If the July’26 Corn Futures are above the top of the straddle range or below the bottom of the straddle range, you would be losing on the trade. You could exit the whole trade if it was approaching the top or bottom of the range, without too much damage. This is a time decay and or range bound trade.
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Hans Schmit
Broker, Pure Hedge Division
312-765-7311
hschmit@walshtrading.com
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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.
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