Planting Intentions Report - The Battle of Wits

Pick your poison.....the battle of wits has begun!   You are no match for the markets brains! 

​I have to be honest, I have no idea what is going to happen with the unveiling of Friday's USDA report.   This is why using an option strategy like the ones I recommended last month are so useful.  They can take a lot of pressure off ahead of reports such the one on Friday.  You would already be quite a bit further ahead had you followed this strategy on corn or soybeans and you shouldn't have much concern over what is contained in the report.  You are making money either way.

If you have not made any 2017 sales yet, you are probably feeling especially pressured.  You could sell some physical bushels, but $3.80 corn and $9.70 beans are not appealing prices either, especially since making such a contract would not allow you to participate in any sort of summer rally.

​The best "option" I can see for now are near dated put options..... just something to get you past the report for a few weeks.  Just to keep it simple, I am recommending May $3.55 corn and $9.70 soybean puts.  The advantage is that if the market report is bullish, you will have left your upside opened.  The downside is really just the cost of the option.  The total cost of the corn option net of commissions will be about .07 where the total cost of the bean option net will be about .185.   I am recommending the near term month because there is just no volume or open interest to go out to Dec on a serial put and they would cost twice as much.  We could look at other things you could do to reduce costs, such as making the position a bear put spread.  If you want to do something like that, I suggest you contact me.

You have until Friday morning to do something.  If you wait until Friday morning to open a brokerage account, you waited too long.  You do NOT have to fund a brokerage account to open one, but you must have one opened ahead of the report Friday if you want to buy an option.  If you want to open a brokerage account with me, here is a link. 

Corn

Corn is not in an actionable place for me.  While the commodity channel index and the sentiment index are low, they are not what I would call extreme.  Even the cycle counts leave open more room to the downside.  Corn cycles usually run about 23 days from one bottom to the next and we are only at day 9.

Sentiment readings still show there are too many bulls at 35%.  I would prefer this number a little lower before Friday's report.

Soybeans

I think we all know that there will be a lot of soybean acres planted this year.  The question will be are more people planning to plant soybeans than what is anticipated or less.  My personal feeling is that this report will be very bearish and we should see lower prices, but the charts show a different story.  The cycle counts still are not bullish, but we will have a buy signal any day on the commodity channel index.

Optimism has not been this low in soybeans since about this time a year ago, and you saw what happened to soybeans afterwards.  There are a few bulls out there, and I would prefer this number be at 20% instead of 30%, but still this is an extreme number.  I would not be surprised to see a sell off for a few days after the report, but the market turn around quickly because the market simply ran out of sellers.

I do not possess a "dizzying" intellect, but believe strategies such as these could make a big difference in a year where the market keeps taking away, while giving very little back.