November soybeans scored a new contract low last week at 10.65 and almost a 1.80 off the June high.

On the demand side our last weekly export sales report showed most of our demand is going for new crop delivery after September 1. Demand is not a driving force here. Important to note that after monthly crop report by the USDA we often see index and trend following funds taking profits.

Should the shorts that are profitable in November soybeans decide to take their fair share we could see a move all the way back to 11.45. But should we continue here mid-month to price in weather and its impact on yields then we should expect that a closes below 10.90 will set up the next moved to support of 10.50. 

Corn Market

December corn is sitting right on its long-term trend line that goes all the way back to November of 3.90. A close under and 3.65 is next. But should this hold funds look to take profits for the month-end we could expect to move back to 4.10 possibly 4.22.

Wheat Outlook

As per wheat we were at 5.60 last January and funds were short a near record 120 thousand contracts leading to a short covering rally back to 7.40.As we entered last week we hit 5.60 with funds only short 61,000 contracts leaving over 40,000 contracts  to come to the market. We expect the European nations loaded with high protein milling wheat to continue to under bid the U.S. making us a third or fourth port of origin for milling wheat. Our wheat low is not in yet in my opinion.

I have laid out my projections for market movement in futures for the next few weeks, but for those looking for conservative option strategies I propose the following trades.

Trade Ideas

For soybeans, buy the November $10.00 put and sell the November soybean $9.00 put for a spread price of ten cents or $500.00 cost of the trade. You could add protection here by buying the 1250 call for an additional 5 cents, giving you protection for a late summer rally due to extreme weather conditions. The risk on these trades is the price paid for the options plus all commissions and fees. For corn, I suggest a strangle, buying the October 360 put and the October 410 call for a purchase price of 12 cents or in cash value, $600.00. The risk here is the price paid for the spread plus all commissions and fees.

Grains Webinar

For those interested in grains, Walsh Trading’s Senior Grain analyst Tim Hannagan hosts a free grain webinar each Thursday at 3:00 pm central time. Tim has been ranked the #1 grain analyst in the United States per Reuters and Bloomberg for his most accurate price predictions for soybeans and corn in the years 2011 and 2012. If you cannot attend live, a recording will be sent to your email upon signup.

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING.  THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT.  WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.