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Grain Markets | Risk Manager

[Hedge @GrainHedging]

If the USDA goes with the top end of the ATG on corn acres, that will put next years ending stocks around 2.1 to 2.2bbu.

Last year that is exactly the same stock estimates we started with in May (2.172bbu), and CZ24 traded in the 460-490 range through June.

So today, with CZ5 at 440, I think the market is already pricing in perfection, and underestimating the risks.

[Hedge @GrainHedging]

@Chitturi_Vamshi Sure thing my friend. The last 5 years for you.

[Hedge @GrainHedging]

Corn exports are projected to be up +7% yoy.

Corn exports are currently running +35% yoy.

[Hedge @GrainHedging]

CZ25 is up 7.5% to start 2025.

- This is the 6th best start in the past 20 years.
- There is a positive correlation between how CZ starts the year and continues into summer (i.e. trends continue).
- This years strong start would correspond with a final change by June 1 of +15%, putting CZ25 at 498.

I think we see CZ5 hit 500 at some point.

[Hedge @GrainHedging]

@GrainStats So basically there are only two ways of making money going forward?

1. Sell a non-software product
2. Sell someone else’s non-software product

[Hedge @GrainHedging]

@MichaelWSpike Great thread. I didn't realize it until now, but this has been on my mind a lot lately.

I have always loved the chase. It is what draws me to the market. But if I am being honest, I have felt extremely burned out lately. To the point I am considering more predictable careers.

[Hedge @GrainHedging]

@MarketMinuteLLC They are chipping away. They are good at buying.

[Hedge @GrainHedging]

@GrainStats Very cool, congrats and good luck. I know you have put in a lot of work into this over the years.

[Hedge @GrainHedging]

@FarmerTheta Possible. But I think it usually rallies just after the Fed cuts, and then sells off hard. So that’s why I think we have one more leg up.

[Hedge @GrainHedging]

Grain prices were the first signal for inflation going up, and now inflation going down.

If you don’t follow commodities, you are missing out.

[Hedge @GrainHedging]

@GrainStats That is a good point. I was just guessing they just don't want to share data because lack of transparency has always been important to grain traders.

I am not familiar with geoGrain, but I would think that data is very valuable.

[Hedge @GrainHedging]

@TheIrishman3097 Has the farmer position + fund position ever not been long though?

I mean, the farmer always has stocks, and half the time funds are long too.

[Hedge @GrainHedging]

So who’s this?

[Foreign Ag Service @USDAForeignAg]

Private exporters reported to @USDA sales of 200,000 metric tons of corn for delivery to unknown destinations during the 2024/2025 marketing year. https://t.co/qmREm4DIW9

[Hedge @GrainHedging]

@jonbottiger What would be an example of a short theta but positive gamma trade?

[Hedge @GrainHedging]

@jonbottiger Do you really feel confident in the usda printing 184?

[Hedge @GrainHedging]

One other interesting data point is that on farm stocks (as of June 1), are 1.162bbu more than in 2014.

So comparing 2014 to 2024:
--> On farm stocks +1.16bbu
--> Fund position -2.07bbu

[Hedge @GrainHedging]

To add more context.

In 2014, the carry in was 1.232bbu and the carry out was 1.731bbu.

The projections for 2024 are a carry in of 1.877bbu and a carry out of 2.097bbu.

[Hedge @GrainHedging]

A 400 CZ24 straddle is trading at 40c, giving you a profit range from 360 to 440.

It is a tempting sale, but this market is a little too complacent for me... Pass for now.