11/18/2024 Escalation Nation

On the Grains
The daily grind is on as we start the last full week of November, where did that time go? With only a handful of days before the December options expire it will be interesting to see what is left on First Notice Day, how much demand will try to stay in the December contract and force delivery? Below is a chart of the Dec/March corn spread starting in September, as you can see we have narrowed that up as exports continue to be excellent however, we still have a processor market that is short bought and will need to cover deliveries over the holidays as well. For anybody that wants to clean some cash corn up before the end of November keep an eye on those processor bids, I would expect to see some pushes being paid. What is concerning in the corn market is that the funds did add 87,000 contracts to extend their long to 109,000. We have gone from short to over 100k long and only managed to have rallied this market 25 cents. At this pace even if they were to stretch it out to a record position we would only have another 50-75 cents to move and its difficult for me to see a fundamental reason for them to get that long at this time, if they were to keep buying I am going to be moving grain out of the bin and looking to protect some 25 production as the subsoil is getting recharged in a lot of areas. 2025 soybeans don’t cash flow that well for me and I suspect that is the same for a lot of guys. It’s pretty early for me to just go sell all my 25 production so I am going to take a look at the option to get coverage at least through the crop insurance pricing period. I am looking at the $4.40 short-dated new crop options (April that expire on 3/21/25) vs the December for 14 cents.