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CME Livestock Daily Options Report

By: PJ Quaid, Senior VP, Agricultural Commodities

 

Wingstop reported earnings above expectations, with strength largely tied to solid same-store sales and favorable input costs — a development that has direct implications for the poultry complex. Wingstop’s core product is chicken wings, so margin expansion often reflects manageable wing prices and steady poultry supply conditions. For agriculture markets, a profit beat suggests continued strong downstream demand for chicken products, particularly value-added and quick-service channels, which supports overall broiler utilization rates and feed demand (corn and soybean meal). If unit growth and traffic remain firm, it reinforces structurally resilient poultry consumption, helping offset softness in other protein categories and maintaining constructive fundamentals for the chicken supply chain.

The crude complex rallied sharply as escalating U.S.–Iran tensions drove geopolitical risk premium back into energy markets. Reports during the European session suggested the Trump administration may be closer to military action against Iran than widely perceived, with the potential for a large-scale operation, pushing WTI and Brent to intraday highs before extending gains through the U.S. afternoon. The move reflects heightened concern over possible supply disruption risks in the Middle East, particularly given Iran’s role in global crude flows and the Strait of Hormuz chokepoint. Meanwhile, updates from U.S.–Russia–Ukraine talks in Geneva were limited, with mixed messaging on progress and little direct impact on prices. Attention now shifts to potential Iranian response rhetoric and delayed private inventory data, which could either reinforce or temper the current risk-driven rally.

U.S. industrial production rose 0.7% in January, topping expectations of 0.4% and accelerating from December’s downwardly revised 0.2% gain. Manufacturing led the upside, increasing 0.6% versus a 0.4% forecast and rebounding from a previously flat reading, while capacity utilization improved to 76.2% from 75.7%, though slightly below estimates. Weather effects distorted some components — weaker mining but stronger utilities — yet the core surprise was concentrated in manufacturing. Oxford Economics expects factory output to remain supported this year by AI-driven demand, benefiting computers, electronics, and electrical equipment, while a potential fiscal boost, lower interest rates, and possible tariff reductions could broaden the recovery beyond AI-linked sectors.

The EPA is expected to send its proposed 2026 Renewable Fuel Standard blending volumes to the White House this week, advancing the rule into final interagency review before public release. These mandates determine required ethanol and biomass-based diesel blending levels and are a key demand driver for corn and soybean oil markets. The proposal is highly significant for agriculture and energy markets, as stronger volumes would support biofuel feedstock demand and margins, while more conservative targets could pressure balance sheets and increase short-term market volatility.

Walmart and Deere report earnings tomorrow. 

Hogs

Sold 100 March 88 puts @ .4750 down to .425

Bought 200 March 93 straddle paid 3.675

Bought 225 Aug 72 puts paid .1750

Bought 200 March 90 puts paid .7750 up to .80

Bought 100 June 104 puts paid 3.35 up to 3.3750 covered 106.50

 

Live Cattle

Bought 150 June 240/252 call spread v 216 puts paid 2.45

Sold 100 April 240 calls @ 6.40 down to 6.35

Sold 200 March 236 calls @ 7.6750 down to 7.650

Bought 600 April 238 puts paid 3.15 up to 3.1750 covered 242.425

Bought 300 March 232 puts paid .675 up to .725

Sold 250 March 240 puts @ 2.25 down to 2.10

Sold 250 June 230 puts @ 4.70

Bought 100 Aug 228/246 strangle paid 10.70 up to 10.725

Sold 150 June 211 puts 2 1.50

Bought 250 April 235 puts paid 2.525 covered 242.125

Bought 150 Aug 228 puts paid 6.15 covered 235.875

Sold 200 June 230/220 put spread @ 3.90 down to 3.80

Bought 300 June 234 puts paid 5.825

Bought 225 Oct 204/190 put spread paid 1.125

Bought 300 April 240/226 put spread paid 2.825

Bought 100 Oct 238/252 call spreads paid 5.275 up to 5.300

 

Feeder Cattle

Sold 200 March 370 puts @ 6.60 down to 6.20

Bought 100 April/May 370/366 call spread diag. paid 2.00 up to 2.05

Sold 200 March 370 puts @ 6.250 down to 5.60

 

Cash settled cheese

Bought 200 march 1.525/1.625 call spread vs selling h 1.475 put paying .035 to .055

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sources
news bloomberg
options data globex
vols bloomberg

 

 

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