Managed Funds Boost Corn and Bean Longs Amid Weather Concerns
Grain markets are showing signs of potential production issues as crop ratings fell more than expected due to recent weather conditions. According to Sean Lusk, Vice President of Commercial Hedging Division at Walsh Trading, weekly crop ratings dropped significantly in the Western belt. This has made the crop potentially more susceptible to future stress if needed rains miss.
Lusk noted that managed funds appear to have bought 15K contracts of corn and beans today, while export interest was also evident with a purchase of 197,272 metric tons by 'unknown destinations' (believed to be China) for US corn. The USDA pegged the U.S. corn crop at 63% Good to Excellent yesterday, which is one point below the five-year average for the week but 10 points below last year's level.
Corn and bean calendar spreads showed modest strength today after a weak performance yesterday. Lusk expressed his view that either there are production issues or there isn't, and prices won't stay at present levels in corn and beans. He also mentioned option strangles as a good way to position, with potential price targets of 13.00 for November beans and 4.40 for December Corn.