Track Record Update, June 2017

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.

Corn

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!

Soybeans

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!