Corn Trade Ideas
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The WASDE report made larger than expected cuts to yield and production for corn. It also lowered ending stocks. There are worries that South America will have production issues due to the El Nino weather pattern. The USDA cut production for the European Union , Mexico and South Africa. Russia and the Ukraine are still fighting and sales could suffer. Brazil exports are expected to increase. Demand for US corn could build over these concerns. Corn could rally into March towards $5.00 or stay in a range around $4.50. I feel the downside is limited and think maybe the harvest lows are in. I am presenting two trade ideas to consider into March:
Sell the ZCH27 450 puts and buy the ZCH27 420 puts at 12 cents. A credit of $600.00. Risk is $900.00 plus commissions and fees.
Or
Sell the ZCH27 485 puts and buy the ZCH27 455 puts for a credit of 22 cents. A credit of $1,100.00. Risk is $400.00 plus commissions and fees.
With the Strait of Hormuz compromised, we could see fertilizer issues emerge and we can add a longer-term bullish call position to the 1st trade idea.
Take the credit from the ZCH 27 450 – 420 put spread of $600 to buy the ZCU27 520 call and sell the ZCU27 600 call for 10 cents or $500.00. The maximum risk for this trade is 28 cents or $1,400.00 plus commissions and fees.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Ben DiCostanzo
Senior Livestock Analyst
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
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