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Turner's Take Ag Marketing | KC Wheat Iron Butterfly

By: Craig Turner, Senior Risk Management Consultant

Turner's Take Ag Marketing
 
Craig Turner
Senior Risk Management Consultant
Turner's Take Podcast

GRAINS | Japan is seeking 175k tonnes of milling whet in their regular weekly tender, including 91k from Canada, 60K from the US, and 24K from Australia.  Pakistan has issued an international tender for 500k of wheat, from world-wide origins, for June/July delivery.  India will allow the export of wheat shipments that are currently waiting to clear customs.  It looks like India will honor previous wheat export sales, but the ban may stop any additional transactions going forward without approval from the government.  Wheat demand is constant even at these prices.  

US corn planting progress came in as expected at 49% yesterday.  ND and MN are the laggards, but the rest of US corn planting is back on track.  The key areas of Midwest corn will be planted in the next week or two. 

The Wheat Quality Council’s tour of Kansas starts today. I expect to see updates and reports on twitter today and tomorrow, but the official yield/production estimates will be released Thursday afternoon.  Traders will be trying to figure out if the USDA needs to adjust HRW production again based on the results of the KS wheat tour. 

***I think wheat will start to consolidate at these levels.  Stocks are tight and prices need to be elevated, but a lot has also been priced in now.  The market has accounted for a prolonged Russia/Ukraine war, poor US HRW production, and lower Indian exports.  There are not too many bullish cards available to come out of the deck and at the same time it is hard to be bearish  between now and harvest due to such tight stocks.

For those of you who like to sell premium, take a look at selling this short iron butterfly

Sell July HRW $13.50 put and call, buy the $12.00 put and but the $15.00 call.   You can probably collect about over $1.00 and have less than a 50 cent risk.  I think we consolidate in a wide range in wheat.  I don't want to sell the straddle outright, so if I buy the wings (the $12 put and $15 call) I can make it a short iron butterfly position .

 

OILSEEDS | Soybean planting has picked up and should be back to the five-year average in the next couple of weeks.  Yesterday’s NOPA crush was about 2 million bushels lower than expected, but at 169.8 mm it is the 2nd largest April crush on record.  Crush margins remain strong, export demand is fairly decent at these high prices, and soybean oil is in demand and tight supply. Oilseeds and vegetable oil remain bullish. 

Old crop canola stocks are getting very tight as we head into the last quarter of the marketing year.  The Canadian Grain Commission says farmers have delivered 12.1433 mmt of canola into the licensed grain handling systems.  That is about 90% of available old crop stocks.  Historically Canada is about 79% sold by this time of year.  The last few months for old crop canola could get quite volatile if not enough end users have adequate coverage.

Craig TurnerCraig Turner
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