Walsh Corn Opportunities - Pure Hedge Division
The September WASDE report came out this morning. Before the report, corn made a high at 426. Right at 11am CT when the report was released corn fell quickly to 416.96 and then recovered the rest of the day closing at 428, up 8 1/4 cents. The high of the day for December corn was 430 1/4.
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NEW CROP CORN
Today’s report showed the USDA lowered yield from 188.8 bushels per acre (bpa) to 186.7 bpa. The pre-report estimates for yield were 189 bpa on the high end and 182.7 bpa on the low end, with an average yield estimate of 186. Planted acreage was increased from 97.3 million acres (ma) in August to 98.7 ma. The estimate for area harvested was increased 1.3 ma to 90 ma. The USDA estimated harvested acreage at 88.7 ma in August. The average estimate for harvested area pre-report was also 88.7 ma. Corn’s reaction to the September WASDE shows that not everyone believes the higher acreage. Production is now estimated at 16,814 million bushels (mb), which is above the highest estimate of the 26 analysts Bloomberg surveyed at 16,742 mb. No changes were made to feed use, despite some analysts expecting reduced feed demand because of a tighter cattle supply. Exports were increased from 2,875 million bushels (mb) in August to 2,975 mb, putting total use at 16,055 mb versus 15,995 mb in August. New crop ending stocks are now 2,110 mb, which would be the highest in 7 years. In August, the USDA estimated ending stocks at 2,117.
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TECHNICALS, COT, & TRADE DEALS
Corn is now trading above the trendline from the April high to the 417 resistance area. The next resistance is 435 and 444. There's also a gap in the chart to 432. If corn moves lower early next week, the next areas of support are 417 again and 407. Today’s Commitment of Traders report showed a small increase in new short positions but still below 100,000. A fourth round of trade talks between the US and China is taking place next week in Madrid, ahead of the November trade truce expiration date. Meanwhile, trade talks with India appear to be heating up with both sides agreeing to resume negotiations.
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2024/25 CORN
Old crop carryout is estimated at 1,325 mb, compared to 1,305 mb last month.
The corn chart looks even more bullish after today’s close. Consider the following trade ideas:
December ’25 CORN
Buy December Corn 450 Call 5 3/4
Price: 5 3/4 Cost: $287.50 Debit/Trade Package, Plus Fees and Commissions.
December’25 Corn Options Expire 11/21/25 (70 Days)
MAXIMUM LOSS: LIMITED
MAXIMUM GAIN: UNLIMITED
Corn is breaking out after breaking the trendline resistance at 417. Remember the futures price does not necessarily need to hit the strike price to profit. The December 450 call was trading at 3 5/8 when I included this trade in my article on September 10.
December ’25 CORN
Buy 1 December Corn 440 Call 8 5/8
Sell 1 December Corn 470 Call 2 7/8
Price: 5 3/4 Cost: $287.50 Debit/Trade Package, Plus Fees and Commissions.
December’25 Corn Options Expire 11/21/25 (70 Days)
MAXIMUM LOSS: LIMITED
MAXIMUM GAIN: 30 cents or $1,500/Trade Package minus Premium Paid
On September 10, this spread was trading for 4 3/4.
December ’25 CORN
Buy 1 December 425 call 15 3/4
Buy 1 December 415 Put 12.00 7 1/2
Price: 23 1/4 Cost: $1,162.50 Debit/Trade Package, Plus Fees and Commissions.
December’25 Corn Options Expire 11/21/25 (70 Days)
MAXIMUM LOSS: LIMITED
MAXIMUM GAIN: UNLIMITED
This trade was going for 21 3/4 on September 10. I mentioned putting this on if you thought volatility was going to increase around the report, after the stretch of sideways trading. I still think more volatility could be ahead.
December ’25 CORN
Buy 1 December 425 Put 11 5/8
Sell 1 December 400 Put 3 7/8
Price: 7 3/4 Cost: $387.60 Debit/Trade Package, Plus Fees and Commissions.
December’25 Corn Options Expire 11/21/25 (70 Days)
MAXIMUM LOSS: LIMITED
MAXIMUM GAIN: 20 cents or $1,250/Trade Package minus Premium Paid
If you’re bearish consider this spread. This trade profits the most if corn trades below 400 before expiration.
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Hans Schmit, Walsh Trading
Direct 312-765-7311 Toll Free 800-993-5449
hschmit@walshtrading.com www.walshtrading.com
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