Joseph Vaclavik is the president at Standard Grain in Chicago. Standard Grain provides futures and options brokerage to farms, feedlots, elevators, processors, end-users and traders. Visit www.standardgrain.com for more information.
Wide Ranges Overnight, USDA Tomorrow...
Apr 09, 2012
· Grains mixed overnight in a wide-range trade; Beans trading more than 12 cents higher in most contracts early last night before selling off to trade near 7 cents lower at one point early this morning; Corn trading both sides in 8-9 cent ranges
· Forecasters looking for cold temps to affect corn areas north of I-80 through Thursday; Most areas that have made significant planting progress will not be affected
· Crop Progress to be issued by USDA this afternoon; Export Sales this morning at 10am CST; USDA April Crop Production issued tomorrow morning at 7:30am CST
· Analysts looking for carryout levels in corn, soybeans and wheat to drop tomorrow; Most traders looking for a corn carryout near 720mil/bu vs. 801 in March
· Gov’t released a bearish jobs numbers on Friday, sending equity and some outside commodity markets sharply lower to start the week; Non-farm payrolls rose by only 120k vs. 200k expected
· Crop Progress expected to show corn planting moving at near record pace this afternoon; Fastest pace on this date was 5% in 2000
· China buying small amounts of Ukraine corn and wheat over the weekend
Many producers are brushing off tomorrow’s USDA report as being just a footnote to the March 30th report. Tomorrow’s report has just as much potential as any to have an adverse impact on the market. We believe that hedging both old and new crop soybean production at current levels is important. Option strategies are more than viable given the recent rally.
New Crop Soybean Hedge: Buy 1 Nov 1320 PUT / Sell 1 Nov 1500 CALL --- Pay 5 cents or better
Old Crop Soybean Hedge: Buy May 1400 PUT for 10 cents or better
As always, call the office with questions or concerns.
Futures and options trading involves risk of loss and is not suitable for everyone.