I just put out a new podcast. We go over why I think the grain markets are getting oversold and why we expect a seasonal bottom in late August/early September. We also talk about the deep discounts cattle and hog futures have when compared to cash prices. Finally I go over crude oil and why I continue to be bearish when we trade over $50.
CORN | After the USDA report we estimate corn yields eventually come in at 166 by the end of the year. That puts our projected carryout at 1.950 billion bushels. If true we expect Dec Corn to be range bound between $3.60 and $3.95. Farmers should look to sell straddles for income when we are in the middle of the range. We like selling put spreads on dips to $3.60 and lower. We like selling call spreads on rallies to $3.90. With harvest upon us and large US old crop stocks and large global stocks, we see corn trading in range for the next couple of months.
HOGS | There is a lot of talk about all the supply coming to the hog market but cash and pork belly prices remain high. As August comes off the board October hogs will be the front month. Many in the trade thing Oct Hogs should be 5 to 10 lower but cash is currently 25 higher! We like selling October Hogs on rallies but we need to see the cash price make a run at 80 and lower.
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