Product Options AM 10-2

Good morning.

Outside markets have the $ firm, metals firm and energies soft.

Complex price direction is mostly higher after a weak overnight start. Beans are up 5-8, meal is up $4-5, and the oil is down 10-20.

US Weather: Warm relative to seasonal norms, returning to cooler levels over the weekend. Precipitation from Louisiana to Tennessee, and from Montana into the Dakotas.

Open interest for beans, meal and oil respectfully; -5351, +547, +388.

Deliveries: 82 oil, zero meal or beans.

Volatilities held firm up front on liquidation urgency, which should soon subside.

Meal straddles

X 400 21.50/23 26.25%

Z 400 30.00/32.00 25.5%

F 400 35.50/37.00 23.5%

H 390  42.50/44.00 22.25%

K 380 44.00/46.00 19.5%

N 380 47.00/51.00 19.5%

 

Oil straddles

X 40 135/155 17.25%

Z 40 200/210 17.25%

F 40.5 255/275 17%

H 41 325/350 16.5%

K 41 380/410 16.25%

N 41.5 435/465 16.25%

 

Trade thoughts: The bounce has begun. Forecasts for a bit more precipitation are contributing to the advances, as liquidation seems to have ended for now.

FC Stone increased their bean production estimate to 3.163bbu, which aided the lower start last night.

USDA shutdown will make for a more weather sensitive trade, as any precipitation will be used as an excuse for the funds to bid up prices and try to drive the recent shorts out.

Higher session, with eyes on the maps, and volatilities starting to relax…

 

Put in a Call.

Tim (Mac) McElmury