This is a sample entry from John Payne’s newsletter, This Week in Grain, published on Friday May 27, 2016.
Here is a trade rec for you to chew on into the 3 day weekend!
December 16 Corn vs December 17 Corn
This is a trade idea for a producers or speculators alike. December 16 corn (growing in the fields right now) is at a 1 cent discount to December 17 Corn (planted next summer). One month ago, the spread between the two was at an 18 cent carry. Hedgers should look at selling this because if wrong, the rally to the risk point should be very beneficial for selling new crop corn above 420-440. If correct, you capture the established carry that should develop from prices falling back into the high 3 dollar range.
This is a bearish corn play that has retraced substantially in recent weeks. What has changed? Yes, demand is creeping up a bit but there has been little on the supply side in this country that should have folks worrying that carryout won’t be above 2 billion bushels. I feel this is money flow driven by an uber short soymeal market combined with speculative buying out of foreign markets as a way to bet against a US rate hike. There is plenty of corn around, this spread should be closer to 20-30 cents by the time we realize the crop in mid-summer, or larger if we have an above trend yield.
I recommend you look at shorting Dec 16 Corn and Buying Dec 17 Corn as close to even money as possible. This trade has little margin, 605 dollars initial/550 for hedgers. If we get in at even money and get stopped out at 20 cents, the risk will be 1000 dollars per position before commissions. IF correct, my target would be 25-30 cents which would be a profit of 1250-1500 before commissions.
Please contact myself or Donna Hughes (email@example.com) for details.
STRATEGIES USING COMBINATIONS OF POSITIONS, SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG OR SHORT POSITION.
Subscribe to This Week In Grain
This Week In Grain - This Week in Grain (T.W.I.G.) is a weekly grain and oilseed commentary newsletter designed to keep grain market participants on the cutting edge, so they can hedge or speculate with more confidence and precision.
This Week In Grain includes an email newsletter subscription.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.