BASIC & RECENT MARKET INFO

Use Puts to Lock-in a Floor Price or to Enhance the HTA Price? This seventh essay discussing how to use options to enhance your grain marketing was written Saturday, April 23, 2022. When the futures market opens Sunday evening, you can spend 30 cents a bushel for the right to lock-in a HTA price for your corn at $6.40 on December futures. December corn futures settled at $7.24 yesterday. If a corn farmer buys corn puts to lock in a floor price for his corn, does he want thos

On April 21st, 2022, September 2022 CBOT wheat futures settled 20 cents lower at $10.75¼. The $10 September wheat put option premium should have increased 6½ cents (delta times 20 cents). However, it increased about half that much. See the price chart below. The $9 September put premium should have increased by a little more than 3½ cents (delta times 20 cents), but it lost a quarter cent! Clearly, the option traders are bullish wheat and many traders realized that the big

When Does A Put Option Have No Potential Value? Lesson 4 option lesson ended with the question, if September wheat went to $25 in June, when would the September $10 put options have no value? Was it when the $10 put become worthless? Meaning the option could not be sold because no one would pay even a fraction of a cent for it? No. Was it when the wheat futures hit $25? No. No matter how high futures price goes, all put options will be “alive” until the end the lasty trading

September CBOT wheat settled at $11.05 on 19 April 2022, down 18¼ cents. The previous day, that wheat futures price was up 22¼ cents, so the premiums of the puts were down on 18 April 2022. The lower futures price increased the value of all puts on the 19 April 2002. A put option gives the buyer the right to sell futures at a set futures price, aka the strike price . As the futures price moves lower, every put option increases in value. The September 2022 $10 put gained $237

Tidbits Brazilian soybeans:  The Ministry of Agriculture and Livestock (MAPA) of Brazil has relaxed the issuance of Phytosanitary Certificates and resumed accepting surveyor samples. However, MAPA added a series of procedures and conditions: A Vigiagro (Brazilian federal health) inspector will personally accompany 1 out of every 10 vessels delivering soybeans to China. The inspector will personally collect the sample. The MAPA memo does not specify how or where the inspector

This is the third installment of a series of educational explanations about put options. Even though most of you do not grow wheat, you can enhance your marketing profits by learning how put options work and what they can do for you. Now is the time to expand your understanding of marketing tools before the 2026 growing season for corn and beans. In January 2022, we had clients with July 2022 HTA wheat contracts a little above $8. Because of Russia’s invasion of Ukraine on 24

Tidbits U.S. and Chinese  trade officials will meet in Paris tomorrow and Monday to lay the groundwork for the summit between President Trump and China’s President Xi Jinping. Bloomberg reports topics of discussion include tariffs, fentanyl, Taiwan, and soybean purchases.   Crude oil:  Saudi Arabia is flanked by the Red Sea on the west and the Persian Gulf on the east, north of Strait of Hormuz. Satellites that track ship transponders show a massive number of vessels are now

Written 22 April 2022 In lesson 1, I wrote about clients who bought September wheat puts with September wheat futures right at $11.00. People were paying 60¢ per bushel for the right to sell September wheat futures at $10.00 and 20¢ for the right to sell September wheat at $9.00. Why would anybody pay so much money for the right to sell September wheat $1 and $2 below the current price? Why not just sell the September wheat futures at $11.00 and not spend $2,943.75 for the ri

Last week, (third week in April 2022), we recommended our clients purchase September Soft Red Winter Wheat Put Options and most likely within the next two and half months, we will be recommending the purchase of December corn puts and November soybeans puts.  We will present a series of educational explanations about put options. Even though most of you do not grow wheat, you need to understand how put options work and what they can do for you. The wheat market is “ripe” for

Managing the Money Supply With a leadership change coming in May at the Federal Reserve, it is time to revisit a topic we covered several years ago.  In the days before paper currency, there were very few money supply problems. As populations grew and society shifted from agrarian to industrialized economy, the ever-expanding need for more money in the money supply accelerated. Thus, paper money was introduced and it was much more convenient than carrying a pound or two of me

An annual trading summary by Wright on the Market’s Eugene  While the markets are on holidays it is becoming a tradition to make a recap of our trading experience to share our growth from rookie to hopefully successful life-long futures traders. Five years ago Nick and I joined Wright on the Market. I began trading futures three years ago in January with $10,000 of joint capital. You can read previous annual entries in our blog . The goal was to enhance Nick’s and my market e

Isaac asked: "How do you know if it is ok to hedge using like Schwab or another brokerage account firm? Or do you need to use like a RJ O’Brien or StoneX  platform? Thanks"   Good Afternoon.   The brokerage firms whose primary business is trading stocks usually have futures brokerage available, but they generally look at futures traders as third class investors who have no common sense and, therefore, discourage futures trading with high "house margins" and high commissions c

Wheat & Put Options On 27 May 2022, September Soft Red Winter Wheat futures settled at $11.66 after trading to $12.85 on 17 May.    Here is the daily price chart for September 2022 CBOT wheat June through August 2022: On 27 May 2022, September Soft Red Winter Wheat futures settled at $11.66 after trading to $12.85 on 17 May.    Here is the daily price chart for September 2022 CBOT wheat June through August 2022:

Tidbits Carryover, aka carryout, is the amount of old crop grain or oilseed that was not used during the marketing year. The job of the market is to make sure we never run out of food or fiber during every marketing year. When necessary, the market rations all commodities by raising the price so users will use less.     USDA reports the carryovers in terms of millions of bushels for the domestic Supply and Demand (S&D) and in terms of million metric tons (mts) for the world S

Market Plan Utilizing Put Options Last weekend, we presented a market plan to lock in a floor price for soybeans near breakeven at no cost upfront while using puts options to capture further price gains should additional price gains become available.   A feature of that plan is it removes all stress from catching a price near or even above the high for the year.   The first step is to use a HTA to lock-in a floor price. Then place open orders to buy puts at ever higher strike

A trend direction can be bullish or up, bearish or down, or sideways. Also, longer trends have more power and contain smaller trends. Primary trend lasts about a year or more, secondary trend takes a month to several months, and a minor trend goes for days to weeks. Take a look at this 2025 corn chart illustration: However, it is easier to say what the trend was rather than to decide what phase it is now or when it is likely to change. Our friend Allen Gard with Clear Focus H

We've prepared general marketing recommendations for U.S. farmers which are absolutely necessary to know and practice. How to get better at marketing? Everyone’s marketing skills are different. You must learn and improve yours. Start by learning the marketing lingo and practice. Find a friend to talk about markets until the lingo becomes comfortable in conversation. Consider working with an adviser or service that will help you learn. Let’s cover basic marketing techniques be

Tidbits Harvest report:  From Central Ohio, double crop soybeans made 56 bushels after 12 tons of chopped triticale. Unlike most of the Eastern Corn Belt, this field had a 3 inch rain on the first day of August and another 1.5 inches through the first week of September.     Crude oil:  The OPEC+ members met yesterday to decide if they should increase daily production in November by 137,000 or 548,000 barrels per day or some amount in between. Saudi Arabia wanted a big increas

Tidbits Wheat export:  This wheat marketing year began 1 June. Total export wheat sales for this marketing year stand at 6.5 million mts, up from 5 million mts last year at this point. By wheat class, HRW sales are 2.6 million mts, up from 1.1 million last year, white wheat at 1.3 million mts, up from 1.2 million last year, and SRW export sales at 857,000 mts, up from 804,000 mts last year.   Corn:  A South Dakota client said yesterday he has 21 fields of corn and 16 of them

Tidbits Ukrainian President Zelensky and U.S. President Trump expressed hope that their White House summit yesterday with European leaders could eventually result in trilateral talks with President Putin over ending Russia’s war on Ukraine. Meanwhile, the war continues with no end in sight. Flash sale: Yesterday morning, the USDA announced the sale of 124,000 mts of new crop corn to unknown. Pesticides:  The Make America Healthy Again Commission expects to recommend no action