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| Great week for the grains last week as for the week Chicago wheat was up +55 cents and KC wheat was up +71 cents. While corn was up +7 and beans up +11.
Friday we saw some slight pressure due to big money trying to pin as many options worthless as possible. For example, May corn went off the board at $4.40. There was a ton of open interest for both $4.40 calls and puts.
I wouldn’t be surprised to see wheat $1.00 higher next week, I also wouldn’t be surprised to see wheat give back half of this rally next week. That’s just the type of market wheat is.
Should you be rewarding this wheat rally?
It really depends. For some of you who can sit on wheat for year or longer then you probably don’t need to do anything.
For those of you that know you’re going to have to move something soon, then you should maybe consider sales or perhaps locking in a floor with puts.
If you aren’t comfortable and are going to have to sell wheat off the combine, it might make sense to put in a floor and create a worse case scenario.
Can we go higher from here? Absolutely. But we can also give back the entire rally. Nobody is smart enough to know.
It’s all about your specific situation. Those who can sit on wheat for years vs those we have to make sales, it requires a completely different approach. Guys that can sit on wheat for years are probably comfortable even buying wheat here.
Those who need to be proactive, should reward this rally. Those who can be patient, be patient. There isn’t a reason to sell if you don’t have to. If you are someone who doesn’t have storage etc reward the rallies. Those with storage and can hold for forever, continue to hold.
As for corn, I think we are going to continue to see corn grind higher as we head into that weather market.
The funds are still extremely short. Yes they covered some of those shorts on this mini rally and we didn’t rally tremendously higher, but all of that short covering was also meant with producer selling due to all of the basis contracts that needed to be priced.
Despite all of those basis contracts, the market didn’t get punched in the face like we did on the March basis contracts.
So now that we have that out of the way, the market has a good chance to start to move higher now. Especially as we get busier in the fields and start to head into that weather market where we typically find strength in the markets.
There is talk about delayed planting now. The forecasts for summer are hot as hell and very dry. We get a weather rally nearly every year. I don’t expect this year to be any different….
Listen to Fridays audio where we go over how you should be managing your risk in the wheat market, the upcoming opportunities in these markets & more
Listen Here: https://txt.so/pDjHQu | |
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Who should reward this wheat rally? Market comments
