BASIC & RECENT MARKET INFO

Tidbits The Federal Reserve voted 8 to 4 to hold the target interest rate at 3.5-3.75% for the third consecutive meeting, as expected. Energy markets are sharply higher today amid stalled Iranian peace talks and renewed threats of further military action. Crude oil has risen significantly, and soybean oil follows. U.S. crude inventories fell by 6.2 million barrels the past week, while the market expected it to be almost steady. Crude oil production rose a bit, while imports d

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

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

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

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

Tidbits How will the markets react to the attack on Iran? Logically, one would expect crude oil to trade higher. There will be fools buying crude oil futures on the opening this evening. They don't realize traders have already Bought the Rumor (U.S. will attack Iran) and those same traders Will Sell the Fact (U.S. did attack Iran). The only reason crude oil would maintain its $12 gain since mid-December is if the insurance companies refuse to insure ships sailing to and from

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:

Highlights Between October and January are the traditional months the U.S. dominates sourcing soybeans to China. However, this marketing year, 46% were from Brazil, up from 29% two years earlier. The two primary reasons are Brazil’s soybean production and storage capacity is growing faster than Chinese demand for soybeans and the U.S. and China trade and political relationships have been in down-trend ever since Biden refused to reduce or remove Trump’s tariffs on most Chines

Tidbits March U.S. manufacturing PMI (purchasing managers index) was better than expected at 52.5, services PMI was below expectation at 51.7, values above 50 imply expansion. Existing home sales were better than expected at 4.38 million. Jobless claims at 210k were less than expected. Iowa is facing drought for the 4th year in a row. Today's drought monitor showed at least abnormally dry conditions with 23% for corn and 19% for beans. Seasonal outlooks, released by NOAA to

Planting Intentions Survey At noon Eastern Time on Thursday, 28 March, the USDA will issue results of its survey of farmers planting intentions for corn, beans and spring wheat as well as the inventory of grains and oilseeds on hand as of March 1st. So, both new and old crops will get a major dose of information that could move the market sharply up or down. CBOT will be closed on Good Friday, March 29. No markets Thursday evening. Trade resumes normal evening session on Ea

Tidbits The Director of Russian Foreign Intelligence Service says France is preparing to deploy 2,000 troops to Ukraine to help fight Russia. France’s President Macron, earlier this month, suggested NATO troops could support Kyiv forces. He has not ruled out the suggestion of French infantry intervention. The Financial Times reports that the EU is set to place a 95 euro per mt tariff on grain imports from Russia and Belarus. EU imports of Russian grain hit a record 4 mil mt

Tidbits CBOT markets will not open until Monday evening. NOAA released its monthly 3-month long-range outlook for the US, joining several private services predicting warmer temperatures for the summer and potential dryness for the Western Corn Belt. Baker-Hughes reported there were 621 oil and gas drilling rigs in operation last week in the USA, 2 less than the previous week and 139 less than a year ago. Canada had 234 rigs drilling, 2 more than the previous week, but 14

The markets usually do not move very much the 24 hours before a USDA monthly S&D as traders have had weeks to determine the positions they want to hold through the report and those on the sidelines stay on the sidelines until after the report. Highlights Poland sent 2,000 troops to the Belarusian border this week. Terrible floods this week in Norway, Slovenia, Alaska, and Northeast China (corn country). Typhoon Kanu’s route changed. It will pass through China’s regions of

The Story of Two Clients Chris and Doug were email subscription clients in May 2022. Both farm in Iowa and both became full service clients of Lance’s in early August of 2022. Chris is not going to renew his subscription. He is very upset with Wright on the Market because markets have gone down and all we do is keep saying markets will go higher. Doug renewed his subscription at once upon receiving the invoice this month. What is the difference? Same emails. Same full serv

Highlights Kevin Duling, market advisor and futures broker in Maupin, Oregon (kdinvestors@gmail.com and phone 541 980 4554) said: "The...