28 May 2019 TUESDAY newsletter and TRADE COMMENTARY
May 28, 2019
NEW TRADE TODAY: closing purchase NOV19 1100 and 1200 strike CALLS.
Soybeans: Beans are likely to follow the corn market up and that does not bode well for my short NOV19 short calls at both the 1100 and 1200 strikes. I feel I have little to gain by risking weather induced crop low yield and will exit these positions today. It will likely be possible to sell HIGHER strikes at a later date and at that time, I’ll have better information on plantings and crop conditions. I’ll put up a post later today or tomorrow with details. My logic is that it might become difficulty (too risky) told these positions and there are better positions available later.
To be clear: I am exiting both my NOV19 1100-strike and 1200 strike CALLS this morning.
Corn: Overnight (Monday into today), the DEC19 Corn contract is trading +8.75 cents at $4.2850 /bushel. Violent and wet weather continued over the long weekend and the planting delays continue.
Crop progress report will be released today at 3 p.m. CST (4PM New York time). Traders are looking for corn planting at 63-65% complete (49% last week, 92% last year and 91% 5-year average). Soybean planting expected at 28-30% (19% last week, 77% last year and 62% 5-year average). Hard red Spring wheat planting at 86-87% (70% last week, 91% last year and 92% average).
Of course I want to see the progress report at 4PM today from USDA.
On “AgDay” this morning are some comments on the flooding and corn/soybean late planting:
Comments from Don: Clearly, there may be more upside to Corn prices. I hold a wait and see attitude, and will continue to stand aside in selling some CALL options far up and OTM on DEC19 Corn futures. I suspect there will be a lot of new this week on the flooding. I’ll try to bring some of those report here to the website and/or provide links for you. The next WASDE monthly comes out Tuesday, June 11, 2019 at: https://www.usda.gov/oce/commodity/wasde/
Farmer’s have some tough decisions to make. Stipulations on crop insurance have ‘must plant’ dates when farmers must choose which payment plant works best for them – and they are placed in a position to speculate on what will happen. Following the corn fundamentals is tough when none of us know what bushels/acre (yield) will be, how many acres will be planted, and how many of those will be harvested. I’ll be watching my
Energy and Gold: Hardly anyone expects a sudden break-through with China/USA trade talks/negotiations. The $US Dollar is strong today dropping Gold prices another few dollars, the OCT19 Gold trading near 1289.10 this morning. I continue to shop for positions in these this week. At the moment, neither crude oil or gold seems to have a clear direction; I suspect this will be the trading this week.
I want to keep patience this week and to remember my job is find “where prices won’t go”, instead of trying to guess where they will go. I am shopping opportunities with crude and gold this week. – Don
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