Daily Commentary 7/23

Daily Commentary: Thursday, July 23, 2026 

Transcript

SPEAKER_00 0:00

Hey everyone, this is Allison giving you today's Daily Green Market commentary for Thursday, July 23rd. And today's session was largely subdued compared to the fireworks of the past few days, but the market does remain pretty well supported here, and that's good. But what are you doing with it? Well, we fielded a lot of questions here over the past few days about ways to stay long the market, and we get it. Maybe you're convinced features will go higher, you feel oversold, or you're tempted to re-own bushels you sold at a lower price now that the market has moved higher. And that's exactly what we're recommending options for. Calls allow you to stay long after making a cash sale while puts protect prices on on-price bushels without giving up the opportunity to benefit from a further rally. So either way, your risk is limited to the premium paid. And we've also talked with plenty of producers here this week who are uncomfortable making additional sales because of the ongoing hot, dry conditions across northern Minnesota and North Dakota. And that's understandable. If production remains uncertain and you're not ready to commit physical bushels, buying a put can protect that value of today's market without creating a delivery obligation. So it establishes a futures floor while leaving the upside open if weather concerns intensify and prices do continue higher. So if you're considering call options, just make sure you're staying disciplined after a 60 plus cent rally across the board. Now is not the time to throw some expensive money at the market. For puts, understand what you're protecting. Options are obviously not free, but they do provide flexibility without placing the entire value of this rally back at risk. So I'm going to go through some thoughts and strategies that we've been um informing producers about. And of course, if you have questions or want to walk through it, feel free to give us a call. So on the corn side, a September short-dated $5 call providing 30 days of coverage costs about 10 cents. The old contract high is 516 and a 510 call costs approximately 7 cents. So that's a relatively inexpensive way to re-own bushels for 30 days if you are convinced corn is going to go higher. So why are we focusing on this $5 level? Well, that level has obviously mattered repeatedly here over the past three years, and it matters again today. And in fact, our next cash sale target is $5. So at the same time, the rally has also already delivered. Corn has added roughly 60 cents per bushel. So on 100,000 bushels, that's $60,000 of improvement. It's protecting part of that gain worth 10 cents to you. Well, a 30-day 480 put costs approximately 11 cents, while a 470 put is near 7 cents. So if corn finds its way back to 425 within the next 30 days, a 475 or 470 put will be really nice to have. If the market instead rallies to 510 or higher, that put will have defended at least a portion of the recent revenue gain while leaving that upside open. So then if we do get this big rally, you can certainly reward it with additional cash sales. And if the rally fizzles, we're looking at downside risk near 475. We did see September corn close two cents higher today at 464. December ended two and three quarter cents higher at 487.5. And soybeans are facing equally important decisions here. Um the November contract hit another new lifetime high today of 1249. So that places soybeans at a three and a half year high and $1.93 above the January low of 1055. So do you remember those dark days when the market was worried about sub-10 beans? We sure do. But we also know many producers are facing a tough decision on adding some cash sales just given crop conditions, and we get it. So we've been obviously looking at these other ways of protecting prices. So if soybeans retrace the move, $11.55 represents the halfway back level. A September shortdated $12 put, providing approximately 30 days of coverage, costs about 12 cents, while a 1220 put costs close to 18 cents. So is that protection worth the premium? Obviously, each operation has a different call on that just based on sales, risk tolerance, and available bushels. But the market has finally given producers a reason to do something that we've been really begging for all year. We do not have a call. We're not necessarily calling the top here, but we should respect the rally, reward it, protect it since it's already delivered. So August soybeans did finish the day four and a half cents higher at 12.37 and a half. November closed at 12.43 and three quarters, four and three quarter cents higher. In September, Chicago wheat reached a high of 710 today, and it has been an impressive $1.36 rally from the June 30th low of $5.74. However, the long-term charts do add some perspective here. Wheat fell from the March 22 high of $13.40 to the August 2024 low of $4.93. That was a staggering $8.47 decline. So even after the latest rally, the market has clawed back about only 25% of that entire break. So that leaves wheat in an important crossroads. A move through $720 would clear the three-year high and open the door toward $7.77. However, after rallying more than $1.30 here in less than a month, this is also a move worth respecting and rewarding. So we do not need to call the top here again, but producers should consider protecting some of that revenue the market has finally added back. So if you want to protect a dollar of that recent move, a September Chicago $6.75 put can be bought for about 21 cents. And if you're still bullish after the sale, a September Chicago 775 770 call is about 14 cents. So today's September Chicago weed selled at 696 and a quarter, 9.5 cents lower. September KC closed 3.3 quarter cents lower at 759 and 3 quarters. September Minneapolis ended a penny higher today at 7.30. And the cattle complex gap lower at the open this morning, but the selling lasted less than five minutes before buyers stepped in and actually pushed both the live cattle and feeder cattle markets into positive territory. So even with the recovery, the contract still posted new lows and lower highs, leaving the bears with the technical advantage here heading into the end of the week. Tomorrow's focus though is going to be the USD's monthly cattle on feed report, which will be released after the close. The average trade estimate is for cattle on feed at roughly 102% of a year ago, while feeder cattle placements are expected to come in near 98% of last year's level. USD will also release its semi-annual cattle inventory report, with the trade expecting only a modest increase in both cows and calves from a year ago. So unless either report comes in well outside of the average trade estimates, they may not have a major impact on Monday's trade. And in our opinion, this recent sell-off has been driven more by money flow and fund liquidation than by any meaningful change here in cattle supplies. Weekly export sales were nothing more than average, coming in below the previous four-week average, but still running slightly ahead of last year. August live cattle gained $2.20, closing at $225.40. December finished $1.87.5 higher at $2.20.67.5. August feeder cattle added $2.60, settling at $3.43.75, while October feeders closed $3.60 higher at $3.33.45. And while today's rebound was encouraging, the bulls still need to produce higher highs and stabilize the cash market before confidence can really return. So if Friday's USDE reports come in near expectations, attention will likely shift right back to cash trade, box beef, and weather fund liquidation is finally beginning to run its course. Lean hogs also opened lower, and it took a much of the morning for buyers to work the market back into positive territory. Futures finished higher on the day, but were able to trade above yesterday's highs. And like cattle, the hog market still produced lower lows and lower highs. Although one encouraging sign was that the contracts closed near their daily highs. So a strong finish to the week, especially a close above this week's highs, would be positive technically here for the bulls heading into next week. October lean hogs gained 55 cents, closing at 88.90. December added 30 cents, finishing at 80.12.5. So again, if you have any questions, really feel free to reach out. We would love to walk you through how some of these strategies could work for your operation. Otherwise, we hope you have a great night. We'll talk to you again tomorrow.