Please join me for a free grain webinar every Thursday at 3p Central. We discuss supply, demand, weather, and the charts.  Sign Up Now

If you would like to receive more information on the commodity markets, please use the link to join our email list Sign Up Now

Commentary

Outside noise lifted wheat and the soy complex today in my opinion. Overnight China stated it’s open to talks with the US regarding tariffs and said the US should be prepared to take action “correcting erroneous practices” and cancel unilateral tariffs. The market took this statement as a positive move toward trade and tentatively bought the soybean market in my opinion. The Trade has become immune to such rumors prior, but the fact the Chinese raised their voice here, soothed fears as equities took off and bond yields rose. Wheat prices have been beaten down as weather has been non-threatening with moisture abundant in many areas. July Kc wheat hit contract lows this week. However, low prices sometimes bring in bargain hunting amid potential increases of demand. There are rumors of some new countries possibly making purchases for future shipment. Then there is the potential for trade deals that may increase buying of US AG by non-traditional buyers. Lots of "ifs and "maybes" here, so as always, we should keep things in perspective. That said, two things are certain this week. First managed funds are short 98K futures/options in soymeal, 2k from the record short. In Chicago wheat, managed money is now short 121K contracts, the largest short in 2 years. Managed money has been net short for the last three years or 148 weeks, a record. Funds stopped and reversed today with some short covering. The Trump administration is also taking a harder-nosed stance against Russia, which then could lead to more sanctions. Ukraine which agreed to minerals deal with the US this week has been signing onto almost everything placed before it by the US and improving its position with the US and Trump administration. Contrarian view here but I think funds that are heavily short wheat, and soymeal will eventually cover here. When? Who knows, but I think it is a good risk to reward ratio to bet further out on the calendar for a possible rally on short covering.  Perhaps the geo-political/trade war noise may possibly prod the funds to short cover.

Trade Ideas-

Options-Buy the March 2026 Chicago wheat 7.00/8.00 call spread for 11 cents. 

Risk/Reward-The Maximum risk is the price paid 11 cents or $550 plus commissions and fees. The maximum value one could collect at option expiration on 2/20/26 is 5K minus trade costs and fees.

Options-Buy the March 2026 Soymeal 350 vs 400 call spread for 5 points.

Risk/Reward-The Maximum risk is the price paid for the spread at $500 plus commissions and fees. The maximum value one could collect at option expiration on 2/20/26 is 5K minus trade costs and fees.

Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

312 957 8103

888 391 7894 toll free

312 256 0109 fax

slusk@walshtrading.com

www.walshtrading.com

Walsh Trading

311 S Wacker Drive Suite 540

Chicago, Il 60606

Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices.PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.