Published on: 17:04PM Mar 23, 2009
Corn and beans opened strong on positive economic news and a bullish Dow move but failed to hold in late trading. I have to add that for the first time in a long time I’m seeing producers interested in selling 2009 corn and beans. I keep telling clients right now a margin call is the best thing you can ask for because it means your unpriced inventory is worth more. As you might surmise it’s easy to say but difficult for producers to get excited about margin calls. This is why many are focused on buying puts rather than selling futures or selling cash. I would urge all clients to be careful about selling call premium to help offset the cost of the puts. The reason is seasonally implied volatility does increase into summer plus you will have two things to worry about, rolling the put up and defending the long call.
In summary: I’m not really excited about speculative trading of corn and beans. My focus is on getting a solid base under my 2009 production sales. I would suggest there are far better trades outside of the Ag. complex to trade at this time.
Special note: One of those commodities I would be watching would be to buy hogs on a double bottom test and sell bonds on a retest of highs. Essentially, buying June hogs below $71 cents and selling June bonds above 125.15 is suggested. As always speculators are suggested to use stops. In hogs I like the $1.50 level and in bonds I would suggest $1.50 as well which would be all time new highs.
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