Considering how we're trading right now, I wouldn't be too surprised to get a similar report and price action that we got with the November report. For the last month, we've added a buck to the corn market. Just like the November report, we've made some very nice gains going into the report. The November report came out bullish, but the price reaction was anything but. We traded higher for about an hour or two only to score a key reversal and then proceed to fall about a buck. Last year, we were flying high heading into the January report. We didn't get the bullish report we were looking for, so we spent the next several months grinding lower and lower until the June 30th report. If I had a lot of unpriced grain and was worried about this report but wanted upside, I'd go buy a serial month put option. A February serial month $6.00 put costs around 14-15 cents. If the report is bullish and prices take off, it would still be money well spent. You could sell the grain and buy a call, but the scales are definitely tipped to the upside making the calls more expensive. The charts are telling me that we could see $6.85-$7.00 corn futures. The same 14-15 cents for a call will only purchase around a $6.65-$6.70 call. The risk to reward favors holding the cash corn and buying the serial month puts over selling the cash and buying calls.
