PREPARING FOR THE USDA REPORT

Written By Sebastian Frost

AUDIO COMMENTARY

  • How much will the USDA yield change yield?

  • Will demand numbers follow yield?

  • Remember: buy low, sell high

  • Chinese corn flooding

  • Do you have plan for the report? Hedge accounts open?

  • Strategies going into report (scroll to read)

USDA REPORT STRATEGIES

Here are a few ways to navigate things ahead of tomorrow’s report utilizing different tools.

Benefit of buying an option before the report is to make you feel comfortable, and doing it proactively instead of chasing the market.

Reasons you should buy calls?

  • If you are oversold because your yields are going to be light.

  • To re-own previous sales

  • As a courage call

Reasons you should buy puts?

  • If you are undersold to protect from lower prices

Corn 🌽

  • Buying Sept calls for re-ownerhsip seems to make sense. It looks like the 4.85 calls are 10-11 cents and the 5.00 calls are 5-6 cents.

  • If you are under protection or nervous about the USDA printing an increase you can buy 4.85 puts for around 12 cents and 4.70 puts for are 6 cents.

  • The options expire on 8-25 which covers one past the pro farmer crop tour

Beans 🌱

  • We like using the short dated new crop options that expire on Aug 25

  • For re-ownership we like buying anything from the 13.20 for 21 cents all the way up to the 14.00 for 3 cents.

  • For those of you needing protection you can look at the same short dated new crop sept bean puts with the 13.20 costing 24 cents and the 12.80 about 9 cents

If you want help utilizing one of these or specific advice, don’t hesitate to shoot us a call or text at (605)295-3100.

USDA REPORT ESTIMATES

Sebastian Frost
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