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CME Livestock Daily Options Report

By: PJ Quaid, Senior VP, Agricultural Commodities

USDA report tomorrow. 

 

Coke reports earnings tomorrow. 

 

The BloombergNEF US Biofuels Quarterly 1Q 2026 depicts a clear, policy-driven reset across U.S. biofuel markets as the expiration of the Blenders Tax Credit and implementation of the 45Z Clean Fuel Production Credit reshape supply, credit generation, and feedstock economics. Imports of renewable diesel and biodiesel collapsed in 2025, driving a roughly 45% year-over-year drop in biodiesel supply and a 10% decline in total RIN generation, while renewable diesel growth slowed under tighter, carbon-intensity-based incentives. In sharp contrast, renewable jet fuel surged—up about 157% from 2024—led overwhelmingly by domestic production following SAF pathway approvals, while ethanol output remained broadly steady with incremental growth from cellulosic ethanol and biomethane standing out as the only consistently expanding RFS category. Credit markets reflected this transition: D4, D5, and D6 RIN prices softened late in 2025 amid policy uncertainty but rebounded into early 2026 as EPA signaled progress toward multi-year RVOs, while California’s LCFS entered a tightening phase, posting its first credit bank draw in more than four years in 3Q 2025 despite still carrying a sizable surplus above 40 million metric tons. Within the LCFS, bio-based diesel has lost momentum, renewable diesel has flattened, electricity continues steady growth, and alternative jet fuel is the fastest-growing category, with California remaining a key SAF hub. Feedstock trends reinforce the shift: soybean oil has gained share in biodiesel as imports disappeared and canola was squeezed out, waste oils continue to dominate renewable diesel, corn remains the backbone of ethanol, and biomethane feedstocks are shifting toward dairy and animal waste with superior carbon intensity scores. Overall, the report highlights a structural pivot toward domestically produced, policy-compliant fuels—especially SAF—while biodiesel and renewable diesel adjust to a more restrictive incentive regime and LCFS markets move gradually from surplus toward balance.

 

USDA grain inspections through early February underscore a clear divergence in demand across the grain complex. Corn remains the standout, with inspections rebounding to about 1.31 MMT in the week ending Feb. 5 and year-to-date volumes running nearly 47% above last year, reflecting steady, nearby-driven demand—led by Mexico—that supports basis and spreads but does not yet signal a global breakout. Soybean inspections slipped to roughly 1.14 MMT on the week and remain about 34% behind last year on a YTD basis, highlighting how demand is still episodic and heavily dependent on China timing amid Brazilian harvest pressure. Wheat was the quiet positive, with weekly inspections jumping to around 580k MT and YTD volumes up roughly 18%, pointing to price-competitive flows into secondary destinations that help stabilize the balance sheet but fall short of a structural demand shift. Overall, the data reinforce relative strength in corn, modest stabilization in wheat, and continued caution on soybeans without sustained shipment follow-through.

 

The U.S.–Argentina trade deal between Trump and Milei is straining the foundations of Mercosur by sidestepping the bloc’s common trade rules and putting Brazil in a difficult position. Brazil is Argentina’s largest trading partner within Mercosur and has seen exports to Argentina surge roughly 55%, but preferential U.S.–Argentina access now threatens that market share. The agreement also supports increased Argentine beef exports to the U.S., benefiting companies with Argentine production capacity and highlighting a broader shift back toward bilateral trade arrangements. The larger issue is not immediate volumes but precedent: if Argentina can strike side deals outside Mercosur rules, the bloc’s cohesion weakens, forcing Brazil to decide whether to defend Mercosur discipline or pursue its own competitive carve-outs.

 

Hogs

Bought 300 July 106 puts paid 3.20 up to 3.225

Sold 300 May 94 puts @ 1.355 down to 1.475

Bought 100 June 104 puts paid 2.575 up to 2.60

Bought 125 March 97/94 put spreads paid 1.225

Sold 150 June 106 puts @ 3.30 down to 3.20

Sold 300 Oct 86/96 strangle @ 6.80 down to 6.775 covered 92.250

Bought 250 March 95/92 put spreads paid .85 up to .8750

Bought 100 April 94 puts paid 1.9250

Sold 150 Feb27 84/70 put spread v. 90 calls @ 1.10 down to .750

Sold 500 April 96 puts @ 2.60 down to 2.5750 covered 96.60

 

Live Cattle

Sold 125 March 239 calls @ 4.0

Sold 100 May 230 puts @ 4.525 down to 4.50

Bought 300 April 300 puts paid .3750 up to .40

Bought 400 June 220 puts paid 3.95 up to 4.00

Bought 200 June 180 puts paid .550

Bought 450 April 238 calls paid 6.0750 up to 6.15 covered 238.00

 

Feeder Cattle

Bought 300 March 300 puts paid .40 up to .45

Bought 250 April 300 puts paid 1.10 up to 1.125

Sold 400 May 350 calls @ 18.5750 down to 18.1250

 

Lean Hogs          
MonthFuturesChangeStrikeImplied VolChange in IVFutures RangeImplied BERealized BE20D Historic VolDays to Exp
LHG6 87.1000.000875.8-0.200.400.320.7513.619
LHH6 96.7250.0009719.60.401.381.190.9615.7332
LHJ6 96.7250.0009717.40.001.381.060.9615.7367
LHK6 100.3750.00010018.2-0.400.921.150.8613.6598
LHM6 109.8000.00011018.6-0.201.071.290.8211.86127

 

Live Cattle          
MonthFutures ChangeStrikeImplied VolChange in IVFutures RangeImplied BERealized BE20D Historic VolDays to Exp
LCH6 238.2000.00023816.8-0.302.132.522.3515.6925
LCJ6 238.2000.00023816.9-0.202.132.542.3515.6952
LCK6 234.3250.00023417.00.002.532.512.1514.5881
LCM6 234.3250.00023416.7-0.102.532.472.1514.58116
LCQ6 232.5750.00023215.7-0.102.522.302.0413.92179

 

Feeder Cattle         
MonthFutures ChangeStrikeImplied VolChange in IVFutures RangeImplied BERealized BE20D Historic VolDays to Exp
FCH6 367.4500.00036817.20.203.973.983.9517.0746
FCJ6 363.2000.00036418.00.004.154.123.9817.4081
FCK6 357.7750.00035818.50.104.484.173.8817.20102
FCQ6 356.9500.00035617.90.004.904.023.6516.21200
FCU6 355.0500.00035617.90.404.404.003.5315.79228

 

sources
news bloomberg
options data 

vols bloomberg 

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