Corn: After corn contracts sold off a bit, this places my short DEC19 Corn PUTS just barely over the “200% rule” but I am staying in this one at least for now. This morning (Thurs 4/25/19) the USDA Ag Research Export Inspections report, while remaining poor -as expected for soybeans, it was a little encouraging for Corn; by that I mean exports maintained a good pace. There is still a possibility of more corn purchases by China (and others) – and the possibility of more exports in ethanol later this year. Since the “new crop” (2019/2020) corn is still (Northern hemisphere) in the ground at early crop stages, there is still a chance for a weather premium to be factored into corn prices. For these reasons, I have decided to stay the course with my short 330 DEC19 Corn PUTs for now. Corn was down almost 3 cents early today and has recovered to only a penny down at midday. I say that, but please recall that normally these small intraday moves don’t mean a lot in the bigger picture. DEC corn contract in 2018, didn’t peak until June18. The lack of trade talk progress this spring had prices on DEC19 – peaking (so far) early in the year.
Crude Oil: Earlier this week, announcements were made by the United States of America’s administration that the exceptions to the Iranian oil embargo were going to be lifted or ‘not extended’ or whatever the verbage is – this means that less Iranian crude will likely be sold in the market (aka “shorter supply”.) Immediately on the tail of that news, the next day the EIA USA Crude Stocks reports high inventory numbers, at least higher than expected – and also new record crude production by the USA at 12.2 million bpd (barrels per day.) The trading that followed the next two days (yesterday and today) has crude trading rather flat for now.
The only concern I have for Crude Oil prices at present is I’m closely watching my JUL19 75-strike CALLs. At midday today Crude, the underlying JUL19 crude is trading 65.86 -0.03. There are only 53 days until expiration on 17JUL2019. A very conservative trader might consider this too close for comfort. Since I personally, am not over-weighted with a high number of these options, I will stay the course for now but continue to monitor closely. The fundamentals of crude (high stocks) don’t justify a $75 a barrel price— but then the oil market always can be driven by news stories and speculation – so caution is warranted.
Gold: Prices still linger just below $1300 /oz, the price moves seem to be driven more by the $US Dollar inverse correlation for now, rather than any fundamentals. The 1450C and 1200P basis the JUL19 futures expire soon in about 61 days and are well OTM for now.
Soybeans: Nothing happening with beans at all. Those highest inventory of ending stocks (this means the project USDA inventory in September of this year) remains the highest since 1986, and exports are so far behind for the present crop that the numbers will never catch the original export estimates.
KSU chart: This one was in the reports here recently but here it is again:
The next commentary coming up on Monday 29th April 2019.
I got an email from the USDA that they are up-dating (changing the service that sends out their report notifications.) This means if you are signed up for any – you have to sign up again to keep getting the notices and reports. I received this link notifying me and asking me to sign up again for reports: (I do not have any additional info for now, but will pass it on if I see it.)
By the way, the next WASDE report is coming up May 10, 2019.
All the best to everyone and thank you. – Don
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