Grain Spreads: Funds Add Length Again

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Commentary

Funds were estimated buyers of 35,000 corn contracts today with an estimated net position of 454,000 contracts; besting the record net long of 429K back in 2010. Dec corn futures last traded this high in July of 2023. Crop conditions yesterday showed corn unchanged at 57% Good/Excellent while Poor/Very Poor conditions remain relegated to the western Corn belt. Funds as of this post aren’t likely to give in based on their adding of positions across food and energy sectors. Escalations are ramping up in both Russia/Ukraine and with Iran as well. As such, the war on commodity logistics continues in both regions, threatening both energy and food commodity movement out of two commodity rich regions of the world. De-escalation hopes are fading, and with that, new highs in grains and now crude back over 90.00 per barrel WTI. Monthly Chart in meal below. A fifty percent retracement from the 2023 high to the 2025 low comes in at 385. That could push July 27 options near 4.00 should it occur. Trade idea below.

Trade Idea

Buy the July 2027 Soymeal 4.00/4.50 call spread for 5 points or $500 plus commissions and fees.

Risk-No more than 3.5 point from entry or $350.00 per spread. Place an offer at 25 points for exit for a gain of 2K less trade costs and fees per spread. 

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Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

312 957 8103

888 391 7894 toll free

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slusk@walshtrading.com

www.walshtrading.com

Walsh Trading

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Chicago, Il 60606

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