With the markets going nowhere I have not had much to write about lately. The wheat puts are expiring today, so I thought this might be as good a time as any to update the 2017 grain marketing track record.
I have yet to make a cash corn sell recommendation. I am still awaiting a bump in price, but even if I recommended selling all 2017 corn today, the corn sales price looks pretty good when you add in the synthetic trades I recommended.
The first synthetic trade I recommended was back on December 7. I had recognized that corn was going to grind sideways for the foreseeable future and wheat as well. Because wheat was at a recognizable intermediate cycle bottom, selling wheat puts looked to be a pretty safe bet. We sold the puts for .35 per bushel on all corn bushels we planned to grow. These options expired on February 25 at a price which allowed us to keep all the premium we collected.
The second synthetic trade began on 1/9/2017 by shorting oil. The trade concluded on 3-28-3017 when the position was stopped out at our target. We had a few other entry attempts which ended in getting stopped out which cost us a few cents, but the trade netted .33.
The third synthetic trade I recommended began on April 25 when I recognized that wheat was once again at an intermediate cycle low. I recommended the selling of wheat puts against your corn and soybeans and collect .31. This position expired today and was profitable, keeping all the premium we collected.
Our fourth and final synthetic trade began on May 9 when we went long crude oil. This was a good trade because the risk was easy to manage but was kind of iffy because the sentiment levels were questionable. The trade worked out however and we made $1500 before being stopped out on May 26. We tried again on May 30 because of the ease of managing the risk but were stopped out for a $400 loss. Net on this position was $1100. When divided by 18000 bushels of corn, this was good for .06 cents.
1. 12/7/2016 - sold wheat puts which expired 2/25/2017. .35
2. 1/9/2017 - Shorted crude oil and stopped out 3/28/2017. .33
3. 4/25/2017 - Sold wheat puts which expired 6/16/2017. .31
4. 5/9/2017 - Long crude oil and stopped out 5/26/2017. .06
Total boost to corn marketings from synthetic trades 1.05
When adding the synthetic positions to current futures price levels, we are tickling at $5.00 per bushel. There could still be one more synthetic trade left before I am finished with 2017 corn. I am still expecting December corn to reach $4.20. If that happens, I will price all the corn netting $5.25 per bushel. This equals 125% of the maximum price of the December corn contract since the summer of 2015. That's pretty good!
In hindsight, I should have been more aggressive selling cash beans back in the winter. Because of the synthetic trades, we should still finish well above $10.00 per bushel on soybean sales.
I have made several recommendations on soybeans so bear with me:
1. June 8 2016, sold 10% of expected 2017 production at $10.05
2. Nov 28 2016, sold 10% of expected 2017 production at $10.36
3. Jan 12, sold 30% of expected 2017 production at $9.95
4. Jan 12, bought serial puts on 50% of 2017 for .10
5. February 7 was a bull call spread on 100% expected production costing .15 which expired worthless.
6. April 25, sold wheat puts which expired 6/16/2017 adding .31
7. May 9, long crude oil synthetic position. Stopped out on 6/26/2017 adding .17
The combination of option strategies and synthetic positions have added .28. The average cash price of the soybeans we have sold so far are $10.05, so we are at $10.33 on 50% right now.
We are just entering the peak time of the weather markets. If soybeans can get back to the 200 day moving average at $9.81 I will probably sell the remaining 50% of the beans. That would give us a total average price on 2017 soybeans of $10.21, which happens to be at .9789% of the peak price of the November bean contract since 2014. That is not a bad spot to have all your 2017 soybeans priced!