Should You Be Bull Spreading "MAY13 vs JUL13" Corn?
Mar 25, 2013
Q. Kevin, with what seems to be very limited US corn supplies what are your thoughts on jumping into the MAY13 vs JUL13 bull spread?
A. I think you need to remain patient. I know a lot of guys who have been trying to jump in it at around $0.15 cents, but I think you might be able to hold out for something more like $0.11 or $0.12 cents. Especially with the recent bump in farmer selling, some recent weakness in the basis and the upcoming fund-roll. Like I said several days back, I like the thought of bull spreading the beans more than the corn. I am just afraid the USDA is going to be able to find a solution much easier for corn than they will for beans. i.e. more SWR feeding, fewer exports, more imports, etc... Where as the Chinese soybean story doesn't seem to be dead just yet. Now there is talk circulating that the Chinese government is going to auction off another 1.0 MMT's plus of domestic beans to help supply local crushers. Point is China is canceling shipments because the demand for protein is now not 3-months form now. This mentality could shift demand near-term back to the US. Something the bean and meal balance sheets can't take much more of.
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