BASIC & RECENT MARKET INFO

Tidbits Flash sale: Yesterday morning, the USDA announced the sale of: 225,000 mts of old crop corn and 268,700 mts of new crop corn to Mexico 50,000 mts of old crop corn and 60,000 mts of new crop corn to unknown 117,000 mts of old crop soybean cake and 135,000 mts of new crop cake and meal to unknown The S&P 500 gained 0.4% this week, extending its winning streak to eight consecutive weeks, the longest since December 2023, while the Dow Jones added 294 points to reach an

Tidbits In hindsight, it is obvious the market was way too optimistic about what Trump’s visit to China was going to produce in the way of good news for corn and soybeans. Too many AI traders have no experience in doing business with China! What we do not like is yesterday’s low in December corn was lower than the previous correction low, which negates the higher high made earlier in the week. Officially, the price trend is now sideways, not up. The low yesterday on Novembe

In this series of put lessons, we have four example farmers using different combinations of marketing tools to price their 2022 wheat: Dan contracted 5,000 bushels of wheat at $11.00 on a HTA and bought the $9 and $10 puts for 29¢ each. Joe contracted 5,000 bushels of wheat at $11.00 on a HTA and bought the $10 and $11 puts for 59¢ each. Don did not sell the futures or HTA, but bought a $9 put for 29¢ and then, when the futures gained a dollar, he bought a $10 put for 29¢. Ju

CBOT September 2022 wheat was up 45½¢ the week ending July 8th. Since the futures price was up, the puts with strike prices within a few dollars of the futures price decreased in value. Why? The higher the futures price moves, the less value a put has because a put gives its owner the right to sell something and if the price of that something increases, the value of selling it at fixed strike price diminishes. For example, on July 1st, September wheat settled at $8.46. The $9

Last week’s comments compared put option value changes with the price change of the underlying futures contract over a four-week period. The obvious conclusion was a futures hedge position would make or lose money faster than an option, but an option would never require a farmer to make a margin call. We recommend the HTA or Forward contract as the primary pricing tool and the puts as a secondary marketing tool to add value to the HTA. The week ending last, Friday (July 1st),

Very few people understand the relationship between the price change of a futures contract and the resulting price change of its options. For the past ten weeks, we explained how the daily price change of the 2022 September CBOT wheat futures contract impacted the value of its $9.00 and $10.00 put options. Now that we have explained the option vocabulary, the concept of options on futures contracts and a detailed day by day explanation of price action, now we will accelerate

Tidbits Brazil: Weekend comments from AgrInvest Commodities: Weather models have reduced expectations for widespread rainfall in Goiás and Minas Gerais, while concerns are growing about possible frosts in southern Brazil over the weekend, especially in areas growing second-crop corn in Paraná. In the physical market, Goiás is expected to register lower production, while domestic consumption continues to advance with the expansion of corn ethanol, reducing Brazil's export pote

Tidbits Corn, beans, and wheat were smartly lower for the second consecutive day yesterday primarily because crude oil was sharply lower. June futures contract was down as much as $13.61 and finished down $7.19. Lower crude prices mean lower gasoline and diesel prices, reducing the value of biofuel blending stock. However, lower fuel prices are good for the economy. A strong economy will increase demand for fuel and everything else, like livestock that eat feed and all the co

Use Puts with HTA of Forward Contract to Increase Income On Aril 27th, 2022, September 2022 wheat settled at $10.89¾, down 2¾¢. The $10 September put settled at 49½¢, up 2 5/8¢. With the price change in the both futures and the put option at 2+¢, one would think the delta was near 1, which does happen when an option is very deep in-the-money. But the $10 put is not in-the-money at all; at today’s close, the $10 put was 89¾¢ out-of-the-money with a delta of .32, as you can see

How to Calculate Time Value of an Option The last put discussion ended with the question, “Was the $11 September wheat put out-of-the-money or in-the-money on the close of business Monday, April 25th with September wheat at $10.71¼?” To determine if the $11 put was in-the-money or out-of-the-money, you ask yourself: If that put option is exercised (exchanged for futures position), would the resulting futures position have a profit or a loss? A put with a strike price of $11.0

What is Time Value of an Option? This is the eighth essay discussing how to use put options to enhance your grain marketing was written after the close Monday, April 25, 2022. For the second day in a row, September 2022 CBOT wheat settled 2 cents lower today, at $10.71¼. Also, for the second day in a row, the September $10 and $9 puts lost value. The $10 put lost 5 cents and the $9 put lost 1 3/8 cents. As you should already know, puts are supposed to increase in value w

Tidbits Iran: The two week cease fire between Iran versus Israel and the U.S. is very fragile and most likely will collapse. Iran claims Israel has already broken the agreement. Many countries claim Iran has also broken the agreement. The Strait of Hormuz remained shut to vessels sailing without a permit and shippers said they needed more clarity before resuming transit. Marine Traffic data ⁠showed two Greek-owned and two Chinese-owned bulk carriers passed through the strait

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

Tidbits Iran has adopted a strategy to undermine the global economic system to force the U.S. and Israel to stop their attacks. Iran has repeatedly attacked refineries and oil fields across the Middle East and has succeeded to seal the Strait of Hormuz to keep crude oil, natural gas, and fertilizer from flowing into the world marketplace. The longer the Strait of Hormuz remains closed, the more likely the lack of fertilizer will produce food shortages around the world. Iran

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 Brazil’s ethanol production is forecast to rise by some 4 billion liters (+11%) in the 2026/27 season from a year earlier, which would set a record level, a statement signed by a number of local industry lobbies said on Monday. Brazil is expected to produce 36.66 billion liters of ethanol in the 2025/26 season, according to the country’s national crop agency Conab. Global edible oil markets are behaving unpredictably as energy supply disruptions from the Middle East w

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 w

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