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Veteran Advisor

Funds Short, Who's Long?

Are the funds smarter than everyone else?  Are they only trading technicals and realize there is huge supply and less demand?  Are they simply being objective and saying there is more grain on hand than buyers?

 

All the numbers say the funds are right.

 

It's easy to come to the conclusion that the farmers are in denial and are facing a marketing challenge of immense proportions.

 

What does one do?  Go long the market and hope to make a dime on a short-covering rally?

 

Buy calls that limit the downside but which cuts drastically into the non-existent profit?

 

Farm the government crop insurance?

 

 

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Veteran Contributor

Re: Funds Short, Who's Long?

I have July calls that I bought too early (ahead of the crop report). If we get a 20 cent rally in Dec corn I will sell my guaranteed bushels for harvest delivery. Basis for next fall is 25 under so cash contracted price would be $3.85 less the average cost of the calls of 6 cents per bushel nets a minimum of $3.79 If there is a continued planting/weather rally I am using the calls to leave the upside open.
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