Grain markets

[Palmerhawk]

Early this week someone( an individual or fund)
bought 100,000 corn contracts on the options market.
Basically, they spent around 23 million to gain control of 500 million bushels of corn.
They were dec calls with strike price of 5.50.
Currently it is priced at 5.02.
Someone is betting that by November corn will go beyond 5.50 to cash in.
Contract highs are at 5.02 for last year.
If it goes to 6 bucks in the next 3 months it would generate a profit of 250 million.
If it stays below 5.50, the 23 million is lost.

As a small time corn farmer I am considering selling right for delivery in March at 5 bucks

Like with oil speculation there seems to be a pattern of big gambles that have paid off.
Does someone know something here?
Grains seem to follow oil....is a major escalation in Iran in the offing?

This is the largest move on corn any traders can remember , especially with short term duration.
Seems odd.

 

[noleclone2]

Early this week someone( an individual or fund)
bought 100,000 corn contracts on the options market.
Basically, they spent around 23 million to gain control of 500 million bushels of corn.
They were dec calls with strike price of 5.50.
Currently it is priced at 5.02.
Someone is betting that by November corn will go beyond 5.50 to cash in.
Contract highs are at 5.02 for last year.
If it goes to 6 bucks in the next 3 months it would generate a profit of 250 million.
If it stays below 5.50, the 23 million is lost.

As a small time corn farmer I am considering selling right for delivery in March at 5 bucks

Like with oil speculation there seems to be a pattern of big gambles that have paid off.
Does someone know something here?
Grains seem to follow oil....is a major escalation in Iran in the offing?

This is the largest move on corn any traders can remember , especially with short term duration.
Seems odd.

Trump mumbled something about escalating yesterday. We are running out of time. We either need to dramatically escalate with troops or slink away.

 

[lucas80]

Early this week someone( an individual or fund)
bought 100,000 corn contracts on the options market.
Basically, they spent around 23 million to gain control of 500 million bushels of corn.
They were dec calls with strike price of 5.50.
Currently it is priced at 5.02.
Someone is betting that by November corn will go beyond 5.50 to cash in.
Contract highs are at 5.02 for last year.
If it goes to 6 bucks in the next 3 months it would generate a profit of 250 million.
If it stays below 5.50, the 23 million is lost.

As a small time corn farmer I am considering selling right for delivery in March at 5 bucks

Like with oil speculation there seems to be a pattern of big gambles that have paid off.
Does someone know something here?
Grains seem to follow oil....is a major escalation in Iran in the offing?

This is the largest move on corn any traders can remember , especially with short term duration.
Seems odd.

See if you can dig up who the investor is. If it's any of these people, you've got a surefire winner. Follow their lead.

 

[Chick Huggins]

Early this week someone( an individual or fund)
bought 100,000 corn contracts on the options market.
Basically, they spent around 23 million to gain control of 500 million bushels of corn.
They were dec calls with strike price of 5.50.
Currently it is priced at 5.02.
Someone is betting that by November corn will go beyond 5.50 to cash in.
Contract highs are at 5.02 for last year.
If it goes to 6 bucks in the next 3 months it would generate a profit of 250 million.
If it stays below 5.50, the 23 million is lost.

As a small time corn farmer I am considering selling right for delivery in March at 5 bucks

Like with oil speculation there seems to be a pattern of big gambles that have paid off.
Does someone know something here?
Grains seem to follow oil....is a major escalation in Iran in the offing?

This is the largest move on corn any traders can remember , especially with short term duration.
Seems odd.

This is really good stuff.

At this point it’s all speculation for us commoners and regular folk. Someone somewhere may know something. Or it could just be prices of oil yo-yoing is catching up to the corn market.

Either way, it’s a big gamble. What happens if it doesn’t strike $5.50/bushel? Does someone get to wake up to 500 million bushels of corn at their door step?

 

[Thebears-165]

https://ph.investing.com/analysis/the-next-inflation-shock-may-be-growing-in-the-fields-217783?utm_source=chatgpt.com

Very interesting. Looks like they hedged as well by selling $6 calls. Has to be a rather sophisticated hedge fund or commodities broker.

 

[Dadar]

Early this week someone( an individual or fund)
bought 100,000 corn contracts on the options market.
Basically, they spent around 23 million to gain control of 500 million bushels of corn.
They were dec calls with strike price of 5.50.
Currently it is priced at 5.02.
Someone is betting that by November corn will go beyond 5.50 to cash in.
Contract highs are at 5.02 for last year.
If it goes to 6 bucks in the next 3 months it would generate a profit of 250 million.
If it stays below 5.50, the 23 million is lost.

As a small time corn farmer I am considering selling right for delivery in March at 5 bucks

Like with oil speculation there seems to be a pattern of big gambles that have paid off.
Does someone know something here?
Grains seem to follow oil....is a major escalation in Iran in the offing?

This is the largest move on corn any traders can remember , especially with short term duration.
Seems odd.

Just imho

If it is based on global demand, Ukraine, Russia and petro product shortages would seem to correlate.

 

[fatpiggy]

This is really good stuff.

At this point it’s all speculation for us commoners and regular folk. Someone somewhere may know something. Or it could just be prices of oil yo-yoing is catching up to the corn market.

Either way, it’s a big gamble. What happens if it doesn’t strike $5.50/bushel? Does someone get to wake up to 500 million bushels of corn at their door step?

This gives very little information. No one knows why they bought those contracts, it could be a hedge vs a short future position or it could be speculation or it could be someone playing long vol or many other things.


Yes futures contract are settled on delivery, this means the corn does trade hands, although most people have the type of account that makes you trade flat instead of take delivery. If you want to take delivery you have to have the means to do so ahead of time.

 

[Palmerhawk]

See if you can dig up who the investor is. If it's any of these people, you've got a surefire winner. Follow their lead.

This gives very little information. No one knows why they bought those contracts, it could be a hedge vs a short future position or it could be speculation or it could be someone playing long vol or many other things.


Yes futures contract are settled on delivery, this means the corn does trade hands, although most people have the type of account that makes you trade flat instead of take delivery. If you want to take delivery you have to have the means to do so ahead of time.

As you know there has been huge profits generated by some massive bets on oil futures within hours ,sometimes minutes before market- changing announcements by trump.

The fact that someone now has made the largest short term speculative gamble in corn market that experienced traders can ever remember is of interest to producers who are trying to cover their highly inflated input costs,ok?

There has been some recent bullish sentiment around grains related to weather disease, oil prices and Black Sea shipping disruptions so maybe this is just a fund with a hunch.

Or short cover....but 500 million bu.?

I yield to your expertise on commodities trading.
I probably should get calls to hedge against the sales made yesterday.....maybe it is going to 6 bucks and I sold for 5.

 

[fatpiggy]

As you know there has been huge profits generated by some massive bets on oil futures within hours ,sometimes minutes before market- changing announcements by trump.

The fact that someone now has made the largest short term speculative gamble in corn market that experienced traders can ever remember is of interest to producers who are trying to cover their highly inflated input costs,ok?

There has been some recent bullish sentiment around grains related to weather disease, oil prices and Black Sea shipping disruptions so maybe this is just a fund with a hunch.

Or short cover....but 500 million bu.?

I yield to your expertise on commodities trading.
I probably should get calls to hedge against the sales made yesterday.....maybe it is going to 6 bucks and I sold for 5.

It is an interesting trade, I just don’t think it reveals much information. We don’t know what the initiater had in mind or what the rest of their portfolio looks like. Interesting none the less

 

[DBQStarhawk]

Analyst comments I found:

Even though a fund bought the contracts, their underlying thesis is tightly linked to global energy markets:

• Brazilian Ethanol Demand: A massive driver in the current corn market is Brazil's surging domestic corn-ethanol industry. Brazil is consuming record amounts of its own corn at home for fuel, which drastically reduces the amount of cheap corn they can export to the global market.
  
  
• U.S. Export Boost: Because Brazil is keeping more corn for fuel, global buyers are being forced to turn to the U.S. This sudden squeeze on U.S. supplies—combined with any potential late-summer crop weather scares—is exactly the type of catalyst that would make a $22 million bet on a harvest rally highly profitable.

 

[Palmerhawk]

Analyst comments I found:

Even though a fund bought the contracts, their underlying thesis is tightly linked to global energy markets:

• Brazilian Ethanol Demand: A massive driver in the current corn market is Brazil's surging domestic corn-ethanol industry. Brazil is consuming record amounts of its own corn at home for fuel, which drastically reduces the amount of cheap corn they can export to the global market.
  
  
• U.S. Export Boost: Because Brazil is keeping more corn for fuel, global buyers are being forced to turn to the U.S. This sudden squeeze on U.S. supplies—combined with any potential late-summer crop weather scares—is exactly the type of catalyst that would make a $22 million bet on a harvest rally highly profitable.

Oil down 7 bucks today; beans down 40 cents,corn down 14.

All about energy markets with a little cooler weather forecasted later in week.

Glad I sold some corn at 5 bucks, wish I had sold beans at 11.88...damn it

 

[fatpiggy]

Oil down 7 bucks today; beans down 40 cents,corn down 14.

All about energy markets with a little cooler weather forecasted later in week.

Glad I sold some corn at 5 bucks, wish I had sold beans at 11.88...damn it

I was surprised to see the disconnect between oil prices and the broader market. I thought with oil down 8% the market would have been up1% or so.

My guess is the market is nervous about what Warsh is going to say later this week.

 

[LafayetteBear]

Oil down 7 bucks today; beans down 40 cents,corn down 14.

All about energy markets with a little cooler weather forecasted later in week.

Glad I sold some corn at 5 bucks, wish I had sold beans at 11.88...damn it

Are you selling your own corn and soybeans on the spot market?!! Tell me you aren't.

 

[Palmerhawk]

Are you selling your own corn and soybeans on the spot market?!! Tell me you aren't.

I an contracting to sell new crop beans for Nov delivery and corn for March delivery.