Grain Spreads: Potential Cup and Handle in KC Wheat?
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Commentary
KC and Chicago traded as much as 25 cents higher with selling coming in early this morning that set the tone for the day session which saw prices chop around range bound with some buying going into the close, although more than $0.15 below the overnight highs. Ukraine's president Zelensky's comments this morning that he would be open to three-way talks between the US, Russia and Ukraine this fall, along with President Trump's phone call to Putin this morning to gauge if a diplomatic path is available to end the conflict, pulled the market down from the overnight spike higher. Latvia announced a 300% tariff on Russian grain moving through their ports. Saudi Arabia passed on their 535,000 tonnes tender due to high prices. Spring Wheat harvest was up 9% on the week to 86% complete as of September 6. That's 3% ahead of last year and 4% above the 10-year average. Winter Wheat planting was unchanged at 2% complete as of September 6. Potential shift in the 6 to 10- and 8-14-day maps bringing cooler temps and improving rain chances for the US Southern Plains that if do verify are very welcome and well timed. Per Bloomberg, potential Cup and Handle breakout on KC Chart. Trade Idea Below.
Dec 26 KC Wheat
Buy the 9.00 call
Sell the 930/900 put spread.
Even money entry.
Max risk -$1500. Per spread
Plus, commissions and fees.
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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