Clear Focus Hedging Newsletter
June 1, 2022

What will the summer bring?

Typically we can see a seasonal pattern lower, especially if the market (funds) perceive the US crop is
made. The funds are still net long, have been doing some liquidation in recent weeks in corn and adding
to their long positions in soybeans. We can still have a few potential issues or challenges yet to
overcome, but the potential list is getting shorter. We also still have global uncertainty with the war in
Ukraine, Drought and trade restrictions with Indian wheat and Malaysian Palm Oil. (Food vs Fuel
debate), Global macro markets in turmoil, expensive energy. China recently announced an agreement
to purchase Brazilian corn.

Here are some of the US challenges yet to overcome. We are getting the crop planted, but we need to
remember we are still in the “too season” – too wet, too dry, too hot. Once the market gets
comfortable and we don’t see more bullish news we could see downside pressure from farmer selling
and fund liquidation.
1. Slow planting progress in Dakotas and Minnesota. Will the crops get planted? Too what crop?
2. Dryer or drought not completely over in the western corn belt.
3. Rapid planting pace – lots of corn pollinating at the same time

Old Crop Corn:
Last month Mike share he was sold out of old crop corn. Market has been inverted. Discussed if want
to maintain ownership to do so with call options. Trade the range.

Old Crop Soybeans:
Same as on corn. Market is inverted, crush margins are near record and finding support with that.
Market is inverted both from a futures and basis perspective. Riding it too long will be costly. If you
have unpriced bushels please recognize that risk.

New Crop Corn:
We have made sales or HTA’s, short futures in September futures and used short dated call options to
capture some upside. When I look at the Sales and Profitability Tracker, today’s prices with normal
yields represent over $700 per acre net (even with $1,500/ton NH3). Make sure you are getting some
bushels sold or floored. We had a dip last week and if you have sales, these dips are viewed as good
opportunity if you want to buy some SD calls to either try and enhance your price or to use as courage
calls to sell into.

New Crop Soybeans:
We have made sales or HTA’s, short futures in November 2023. Last week we attempted on a quick
rally to take out the high at $15.55 on February 24, 2022. When I look at the Sales and Profitability
Tracker $15.00 beans represent over $350 per acre net income.

The June crop reports often can be volatile as crops are you and many things can change on the balance
sheet (yield, demand for grains) all impact the carryout. The Quarterly stocks report on June 30 th is
confirmation that this years past years balance sheet is accurate. This can and has often led to some
interesting surprises. In conclusion, think about where you want to be. Long, short or neutral heading into these reports. Is it worth protecting the profitability of $7.00+ corn and $15.00+ soybeans. Should I be looking at 2023?


Trade Ideas:
These are just some ideas, please make sure you understand the risks and call for specifics. Here are
some prices for reference
Sept 2022 - $7.47
Dec 2022 - $7.32
Nov 2022 - $15.46

We like selling September futures and then looking to roll at even money or a slight carry later in the
summer. Why give up the extra 15 cents? We like to sell into this and buy SD calls as needed or on dips
if you sell above your comfort zone. Using puts are also an excellent choice, so I wanted to highlight
some quotes. ATM puts and calls are roughly equal in price so a $7.30 put or call would be around 23
cents for either.

SD July $7.00 puts = 10 cents
SD July $7.30 puts = 23 cents
SD Aug $7.00 puts = 27 cents
SD Aug $7.30 puts = 41 cents
Dec $7.00 puts = 48 cents
Dec $7.30 puts = 65 cents

Sell $9.00 Dec call = 23 cents

Look to sell and average November soybean sales. We like put/call spreads or floor strategies with
upside to at least get a floor in the market and buy some time to see if we can take out recent highs. My
preference would be to at least get a $15.00 floor protected with a SD July. You can always re-invest
again if prices rally or you run out of time. $15.00 soybeans are worth protecting.

SD July $15.00 puts = 13 cents
SD July $15.50 puts = 34 cents
SD Aug $15.00 puts = 35 cents
SD Aug $15.50 puts = 60 cents
Nov $15.00 puts = 69 cents
Nov $15.40 puts = 91 cents

Sell $18.00 Nov call = 30 cents

Charts for reference:
Dec 2022


November 2022 soybeans:


Dates to remember:
Every Monday – Export Inspections at 10:00 am CST
Every Thursday – Export Sales at 7:30 am CST
Every Friday – Commitment of Traders Report at 3:00 pm CST
June 10th – WASDE at 11:00 am CST

June 24 th Cattle on Feed at 2:00 CST
June 24 th Option expiration for July options
June 30 th Planted Acres and Quarterly Grain Stocks at 11:00 am CST

Mike Daube (574) 586-3784
Allen Gard (573) 769-4193
Peter Schram (317) 910-1473