10.17.25 Tredas Weekly Recap

Weekly Action:

Dec25 Corn up 9.5 to $4.225

Nov25 Beans up 12.75 to $10.195

Dec25 Chi Wheat up 5.25 to $5.0375

Dec25 KC Wheat up 8.5 to $4.915

Dec25 Cotton up 44 points to $0.6428/lb

Dec25 Hogs down $1.65 at $82.375

Dec25 Fats down $0.7 at $241.825

Nov25 Feeders down $4.2 at $371.7

Dec26 Corn up 4.25 to $4.575

Nov26 Beans up 7.5 to $10.6425

July26 Chi Wheat up 2 to $5.415

July26 KC Wheat up 5.5  to $5.395

Dec26 Cotton up 17  points to $0.681/lb

  Grains:

Corn - up 9 on the week sounds good until you look at the chart and remember we were down 9 last week. Green is green, but we’re still floating well below ARC/PLC support levels. Yield reports remain mixed to lower across most of our customer geography.  Without an updated WASDE report, it’s anyone’s best guess what revisions USDA will make to yield.

One thing to keep in mind is Dec to March carry. That spread has come in significantly since bottoming out at -18 in September. We would seasonally expect that spread to continue to narrow into Dec expiration which would encourage us to roll Dec hedges out to March on bushels that won’t be delivered in the next month (we’re talking bin bushels here). The goal is to roll when the spread is the widest, to capture the most carry. So if you have hedges or HTA’s that you don’t plan to deliver at harvest, we recommend rolling those out to the March contract.  

 Soybeans – up 12 on the week sounds good until you look at the chart and remember we were down 12 last week. Green is green, but we’re still floating well below ARC/PLC support levels. Yield reports have been really positive across our customer base. 

 One thing to keep in mind is beans have extremely low volatility at the moment. Nov beans have traded a just over $1 range since the start of the year. For the sake of perspective, I drew that $1 range on a weekly continuous chart going back to 2006:

 My point is NOT that we cannot go lower; my point is that things can change with the stroke of the President’s keyboard and, right now, options are cheap. If you have beans in the bin and want to make sure you have “worst case scenario” covered, a 950 March put is going for under a nickel. That's 150 days of protection. You could even bump that up to $10 for 14c.

Conversely, if you want to have the confidence to pull the trigger when we see $1070 again, buy some “courage calls” while we’ve pulled back. There is no better time to buy options than when volatility is low. The chart below is IMPLIED VOLATILITY in soybean options (by the way, the corn chart looks the same) – historically low. 1150 March calls are under a dime at the close. Notice how much of that chart above is $12+. 

 Livestock:

Trump: "We are working on beef. I think we have a deal on beef that's gonna bring the price of beef. That would be the one product that we would say is a little bit higher than we'd want it. Maybe higher than we want it. And that's gonna be coming down pretty soon too. We did something, we worked our magic."

 Dec Fats:

We currently don’t know any details of what this will entail.

Economy:

Something That Probably Means Nothing:

According to old folklore, the black and brown bands on a woolly bear caterpillar predict how harsh the coming winter will be. A wider brown band supposedly means a milder winter, while more black means colder, snowier weather ahead.

In reality? The coloration depends on the caterpillar’s age, species, and moisture during molting, not meteorology. But spotting one scurrying across the road in fall still feels like a tiny, fuzzy farmer’s almanac in motion.

 Quote of the Week: