Play Turner’s Take Ag Marketing Podcast Episode 273
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The grain markets are on fire. Corn and soybean oil closed limit up today (4/22) and wheat was limit up mid session but couldn’t quite stay at those levels by the close. We go over why the CBOT is trading this way, what to look for, and how to trade it this spring and summer. Make sure you take a listen to this week’s Turner’s Take Podcast!
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Limit Up – Corn
Corn was limit up today lead by a very strong cash market. End users need coverage between now and harvest and the grain is just not readily available. They have to bid up prices to get the last remaining bushels out of farmer storage.
There is concern about production declines in Brazil (2nd crop corn). Any exports that Brazil can not fill usually comes back the US. That could be 5mm mt of corn or 200mm bushels the US might not have to export. We also heard rumors of China looking to buy US corn but we could not verify that today.
Planting is not off to a good start and based on the long term weather reports this spring/summer could be warmer and drier than normal. We have tight old crop stocks, not enough US acres, and if need a record yield just to have adequate stocks next year!!!
No one wants to get short, even farmers who eventually have to sell their grain. Inflation trade and money moving into the Ag space is a reality. Seasonally this is a time of year to be long grain (especially when stocks are tight)
Add in all of that and we get a big rally. Keep in mind May FND is a week away and if the supply is not out there then commercial end users will be buying for delivery. I’m sure there are margin calls and forced liquidation too. Moral of the story is we are in for a wild spring and summer. Big breaks, big rallies, no place for the faint of heart.
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Trade Ideas – FILLED
FILLED – OLD CROP – Bought the July Corn $6.50 calls for 14 cents on 4/20 and sold the $7.00 calls today for 14 cents. Free $6.50/$7.00 July Call spread.
FILLED – NEW CROP – Bought the August short dated new crop $5.50 calls for 30 cents on 4/20 and sold the $6.00 calls for 30 cents today. Free Aug short dated $5.50/$6.00 new crop call spread.
I still like buying call spreads and selling put spreads to finance old crop and new crop corn positions. I also like buying futures and then buying a 1 month put for 15 cents. For example, Dec corn is around $5.55 and the short dated June $5.40 puts were around 15 cents. That is not a bad way to get long Dec corn and have some protection in case this all falls apart.
Limit Up – Soybean Oil
Soybean oil was limit up today and lead the soybean complex. Global vegetable oil stocks are tight, demand is inelastic, and the high price of soybeans/meal is holding back the crush. This means we are not seeing as much soybean oil produced (processors crush for meal, not oil) and making the market even tighter.
Will these high prices ration demand and/or bring out new acres? That goes for both corn and soybeans. I do think we see more wheat used for feed in the western corn belt and globally. Meal is getting to prices where the feed demand could drop off. That would be bullish for soybean oil but not for meal.
The trend is higher but we will see big pullbacks. In markets like this traders and end users tend to buy the dips until new crop is made.
Interested in working with Craig Turner for hedging and marketing? If so then click here to open an account. If you are a speculative or online trader then please click here.
About Turner’s Take Podcast and Newsletter
If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes! Craig Turner – Commodity Futures Broker 312-706-7610 cturner@danielstrading.com Turner’s Take Ag Marketing: https://www.turnerstakeag.com Turner’s Take Spec: https://www.turnerstake.com Twitter: @Turners_Take Contact Craig Turner
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