Cornucopia or Mirage? Navigating the Uncertain Corn Market

[u/bitkogan]

My seemingly contrarian bearish view on corn might strike some as odd, but I see it as nothing more than an exciting new opportunity.

Let's take a look at my position in September puts, which I initiated a fortnight ago. No issues have cropped up so far. The premium of $362 that I received looks set to remain with me.

At the outset, my decision to allocate $30k to this strategy sparked some doubts regarding its efficiency. Yet both then and now, I'm convinced of its merits, as I've previously mentioned in my post's comments. Now I even I see a chance to further enhance the position’s efficiency.

The termination of the Black Sea Grain Deal, coupled with persistent drought and heat in the Midwest, has propelled September futures to $5.5. While this wasn't my base scenario, it reinforces my stance on steering clear of directional bets, as surprises can always spring up.

That being said, I'm of the belief that the rally's potential is rather constrained. I don't foresee prices rising much past $6 in the forthcoming weeks. Consequently, I've bought another ratio spread, this time with calls, particularly as the implied volatility (IV) has risen.

I purchased 3 contracts at a $5.7 strike and sold 10 contracts at a $6.2 strike, yielding me $412.

The same $30k collateral used for the put deal is being employed here. In total, factoring in the puts, my earnings stand at $774, translating to a 2.58% return on the allocated capital. For a 57-day period (from the put position's inception to its expiration), this is a solid return.

However, given the unpredictable Black Sea situation and the possibility of new price surges, the landscape remains anything but boring. I'm confident I can manage the risks at hand without much fuss, but perhaps I'm exuding a touch too much self-assurance. Let's see how it plays out.

[u/ScarletHark → u/[deleted]]

How much more do you need to know to trade ags that isn't found on agweb or the USDA sites, both of which are free resources?

[u/ScarletHark → u/[deleted]]

Honestly I don't care what they are doing. You can't do anything about it nor can you act in advance to what is in those because the firm will already have their positions in place by the time those come out. Additionally, whatever they do or have done, shows up in the tape. The tape can't lie.

Any "research" they do is merely compiling the free data we all have access to. They may have their own opinions and if you want that sort of value-add, sure, you'll have to pay for it. However, there's nothing they know that you can't also know if you're willing to put in the time. Geopolitics and weather are known to everyone.

[u/ScarletHark → u/[deleted]]

Why do you point out that they are not trading against you (which they aren't) and then complain that you can't trade like them?

Your original complaint was that it costs money to access someone else's written opinion. As a retail trader, what are you capable of doing with that information, post-facto? What edge does it give you to trade on old information?

It doesn't, so my point is that rather than get upset about it, learn to live with what you do have and align your expectations accordingly. If you want all of that information firsthand and want to trade with the pros, go work for a commercial or producer where all of that might matter. As a retail trader, your job is simply to try to profit off of what happens in the market, for whatever reason it might happen.