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Unusually dry weather in the U.S. Corn Belt region and the upcoming USDA acreage report have added uncertainty to the grain market, with the corn and soybean CVOL indexes rising to their highest level since last July. Oliver Sloup with Blue Line Futures explains.

Market Recap

New crop corn futures finished have been red hot this week but saw a round of profit taking in today’s trade.  At the close, December futures were 8 cents lower to settle at 620 ¾.  Front month July futures settled 10 ½ cents lower to 660 ½.  Keep in mind that tomorrow is July options expiration which could also have an impact in price action.  If you’re still in July futures, you may consider rolling to the September contract.

On the soybean side of things, today’s retracement was a little steeper than that of corn.  New crop November soybeans finished the day 37 ½ cents lower to settle at 1339 ½.  Front month July futures settled the day 14 ¼ cents lower to 1500 ½.  July options expire at tomorrow’s close.  With the open interest in the $15.00 calls at over 18,000, it looks as though that could be a headwind on the last trading day of the week.  It doesn’t have to be, but it’s certainly something of note.

July Chicago wheat futures were able to buck the weakness in corn and beans.  At the close, July futures were 4 ½ cents higher settling at 739.  The September contract was also 4 ½ cents higher, settling at 752 ¾.  

Was today just profit taking or are we approaching a top?

Short answer:  nobody knows.  Technicals and everything else has taken a back seat to weather, something that is out of our control and yours.  With that said, risk management is in your control and there are some great tools available to help do that.  

A tool to help manage risk or gain market exposure

New crop weekly options are a great tool for traders and hedgers to consider using during this volatile growing season.  The reduced time frames can not only lower option premiums but also help manage risk around high impact events.  With this month’s acreage report falling on a Friday (June 30th), market participants could look to New Crop week 5 options to help manage risk or gain exposure ahead of the report.  Historically this report has been known to produce some big daily price swings.  Over the last 5 years on report day, we’ve seen corn average a 7% trading range and soybeans 4%. 

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