USDA in 2 hours

  • Posted on: June 30, 2014

Latest info I saw suggested that the American Farmer still has 30% of the  13 crop in the bin,  unsold.  For 2014 the estimate was less than 10% sold.

Dupont released its quarterly figures and announced that there were many more sales of bean seed than corn seed.

Fundamentally, this suggests a bearish futures for new crop prices,  as long as we get timely rains.
In 2010, at this time of the year we looked great. Then mother nature shut off the rain and we had the drought of 2012.

Since NO ONE,  not Al Gore, Not Al Roker  can predict the weather more than about a week or so out, it seems folly to me to bet heavily on a coin flip of the weather.

Fundamentally, It looks bearish for new crop corn and beans.

The farmer remains unsold, and for the last 4 years, they have been rewarded for not selling until harvest.

This might be the year they have to pay the band for the dance. Time will tell.

We are within spitting distance of the 4 year low in December Corn  down at 4.35.

So, what to do in front of report?

I’d buy cheap calls for the next 25 to 53 days.  Cheap means 5 to 10 cents a bushel.
This is a trade to fade fundamentals and fade the herd.

Sitting here talking to over 300 producers and speculators  in the last week, the sentiment is bearish.

My opinion, take it or leave it:   I’d buy some cheap calls and get ready to flip them in the next 5 to 7 business days.

We might get a neutral to bearish number.   Everyone is already selling in the hole, either speculating or hedging w/ futures.

The boat will be tipped to far to sellers.  So, even if we get a bearish number,  there might be no one left to sell, so  …. we’ll have a relief rally.    6 weeks from now we may well be lower,  In fact that’s what I’d be leaning towards if we keep getting  the Eden weather forecast.

For this number and the next week or so,   I’d fade the herd, but with long options so you don’t get chopped up or stopped out.

As always,  this is just an opinion.  Follow, Fade or ignore at your own financial risk.

If you are looking for a broker who can help you make trading decision and hedge trades,   please contact me.

CER