06 September 2018 – THURSDAY

06SEP2018 Thursday  SOYBEANS and CORN

I bought back my short DEC18 Crude Oil  50-strike PUT for 0.04.  I had sold it on 8/21/2018 for 0.12.   The profit on each was $80 excluding commissions. The next issue of TIME FARMING TRAINING BULLETIN trade summary sheet will indicate this.

I remain short the DEC18 Crude Oil $90-strike CALL since 8/2/2018 at 0.09

On September 12, 2018 WEDNESDAY at  12:00 noon, is the next USDA monthly WASDE (World Agricultural Supply-Demand Estimates) report.  The link to that page is here: https://www.usda.gov/oce/commodity/wasde/

SOYBEANS:  It is expected that the jump in soybean stocks from the August 10, 2018 report will be again confirmed – and this means the chances of soybean prices going up for now (other than a slight bounce) might be limited.  Here is the table indicating a comparison of 2016-17 season, the current season 2017-2018, and the next season 2018-2019: 

A reminder this is the United States table (not the world.)

CORN: In all likelihood,  corn prices will be higher for the “new crop” rise into next season’s crop. The first contract for the “new crop” is DEC18; this contract is normally down from July through the harvest (Northern hemisphere) into SEP and NOV in the year.  The corn, unlike the soybeans, are in a LOWER stocks (supply) for the “new crop” of 2018-2019.

You see in the table that new crop corn ending stocks will be near 1.684 billion bushels down from 2.293 billion of last years figure.  If the USDA/WASDE report next week revises the 2018-2019 Ending Stocks down, the DEC18 corn contract price could go up from the current price of about $3.65/ bushel.

I am thinking that AFTER that report (12 SEP 18), corn will find a fair price, and once that is done, I may look forward to selling some CALL options far above the DEC18 contract price.  I hesitate now to do that until I see the numbers in next week’s report.

Crude Oil:

This comment here is similar to another post in TRADE COMMENTARY a few days ago.  I want to sell some strangles (selling both PUTS and CALLS) far OTM,  basis the JAN2019 Crude Oil contract.  There has been some up and down price action lately in Crude Oil, as traders speculate about the world economy.   China continues to buy oil from IRAN, as the United States of America puts pressure on its allies to uphold an embargo against buying oil from IRAN.  Unless there is some major change from the present situation, crude oil is not likely to make a major move in price over the next few months.  Next week, I will shop the options for a short strangle.  The balance in doing this, will be to find enough premium in the JAN19 class to justify making this trade.  As you know, the time premium decay in an option’s price accelerates the closer it is to the expiration date.  The JAN19 Crude Oil options expire on 19DEC2018  — this is 99 days from today.   Basis the JAN contract, there is no strong seasonal pattern over the last 15 years for this contract to vary in price during this time period.

I am saying, if JAN19 Crude should have a large price swing, it will probably be due to politics rather than any major seasonal price pattern.

That is all today.  Good trading to all. – Don


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