Play Turner’s Take Ag Marketing Podcast Episode 258
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In today’s podcast we go over the macro markets, corn, and soybeans. We talk about how farmers and speculators can get some long exposure in these markets and why we are bullish for 2021. Make sure you take a listen Turner’s Take Podcast!
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Grain & Oilseed
I talked on the podcast on how to get long corn and soybeans for 2021. The idea is the same for both. We want to buy call spreads and sell puts to finance. We don’t see July Soybeans trading below $11 or July corn below $4 anytime soon. There will be breaks in these markets and if we see soybeans pull back 30 to 50 cents, or corn 15 to 20 cents, we will be using these strategies for both hedgers and spec traders.
For spec traders we want to get long corn and beans as there is still a lot of upside potential in 2021 between now and July. For farmers there are two plays going on there. Many farmers I know sold a lot of soybeans around harvest and stored corn on farm. For farmers looking to re-own some soybeans, we will be looking for the pullback to buy the call spreads and sell a put. It will be a nice way to get back into soybeans.
For corn we buy the call spreads and sell the puts as a “courage call” play. It think corn can go higher this spring and summer. Farmers will hold onto their crop and if prices do get in the high $4s they will be a lot of uncertainty of when to sell. It is going to be a whole lot easier to sell cash if you already have the calls and call spreads in the hedge account so as you sell the cash corn you are still long the board.
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As for what spreads we put on, it all depends on what the market gives us. Right now I’m looking at buying the $5 July call, selling the $6,and selling the $4 put. The idea is to have the call spread in place in case we trade into the high $4s this spring/summer. Farmers can pull the trigger with confidence on cash sales at that point and still be long the board. I like the short $4 put because I don’t see July corn going below $4 given the current carryout, likely S. American production issues, high prices around the world, the fight for acres we are going to see in the US between corn and soybeans. If we get a big pullback in corn I’ll adjust the the call spread lower and still write the $4 for financing.
For soybeans we need a pullback. We can get a 30 to 50 cent pullback over the course of a couple of sessions at any time in soybeans, as traders who have been around the block a few times know full well. If we get a pullback close to $12 the July $13/$15 call spread with a short $11 should be close to even and an attractive re-ownership strategy for this marketing year.
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