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| Poor action in the grains as we inch closer to the highly anticipated USDA stocks & acres report.
On yesterdays and todays price action the grains did take out some downside support. Especially in corn.
Seasonally, these markets don’t have much of a reason to rally. However the lows in the markets are still probably in for now.
I don’t think we are going to go straight up, but we have a long weekend with no markets Friday. We have a quarter end here. We have the funds very still very short.
So there are plenty of reasons why they could look to continue to cover. Unless that report is super negative. But even if it’s negative, what is left for the funds to sell? We are going into a planting and growing season and we haven’t planted anything yet.
If you are in that situation where you have to make sales or have unprotected bushels, there are plenty of strategies out there. One might be calls or puts as they are dirt cheap right now.
For those of you that are undersold, the simple thing to ask is do you have a good basis or a bad basis?
If you have a good basis, you sell the basis. And if you want to re own the board, you could buy calls.
If you have a bad basis and think basis will improve, then you could buy puts.
If you are in a situation where you are paying commercial storage. It might not make sense to pay 5 cents a month or more for commercial storage on corn when you could buy a call for less than that a month.
It might make more sense to put in a minimum price and put in a worst case scenario. Basis should be getting better, when farmers get into the field and are busy basis typically gets better. It’s hard to buy grain when farmers are busy.
Listen to yesterdays audio where we go over all the ways you can manage your risk ahead of this major USDA report
Listen Here: https://txt.so/DKOmm7
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Strategies for tomorrows major USDA report - market audio comments
