Walsh Corn Opportunities - Pure Hedge Division
December corn closed at 418 ¼, down -4 3/4 cents. March ’26 corn closed at 436 1/4, down -4 1/2 cents. Last week, corn saw some selling pressure early on, but finished strong with shorts covering positions into Labor Day weekend. Corn has now made 4 weeks of higher highs and higher lows and has bounced off the 50-day moving average. Support is at 395 and 400. Resistance is at 418, 425 and 430.
Corn has been supported by drier weather in the Eastern Corn Belt and parts of the Southern Corn Belt which has brought new drought concerns, in addition to disease pressure found in recent crop tours. It may be too early to have a significant effect but there have been some reports of scattered frost in the northern Midwest. As of August 31, 90% of the US corn crop reached the dough stage, only 1 point below the 5-year average. Crop progress data showed the crop was 58% dented, while 15% was listed as mature. Corn conditions are now 69% good/excellent, falling 2 points. The worst corn conditions were recorded in Illinois, Indiana, and Minnesota. Illinois saw the biggest decrease in corn ratings, falling 6% from the previous week. Illinois corn is rated 17% poor/very poor. Corn conditions last year at this time were 65% good/excellent. The yield estimate made in August by the USDA at 188.8 bpa is likely the peak. Any changes to yield going forward will likely be lower. Corn demand has been strong from buyers outside of China due to higher shipping prices in South America. Top buyers of US corn last week were Mexico, Colombia, and Japan.
If you like this article and would like to receive more information on the commodity markets, please use the link to join our email list
Volatility and COT
Volatility in corn has been increasing. Realized volatility has risen from single digits to 13%, while implied volatility reached 18.6%. This trend in volatility means larger moves could be ahead as harvest approaches. Corn closed 5 cents higher during yesterday’s session, and open interest increased 10,500 contracts indicating new long positions being added. The latest Commitment of Traders report showed managed money traders adding 33,964 contracts, bringing their net short position to -110,686 contracts. More short covering can happen going forward, especially with a weekly close over 420.
If you like this article and would like to receive more information on the commodity markets, please use the link to join our email list
The time to open an account is NOW, before harvest kicks off. Opening an account takes less than 10 minutes and gives you a wealth of market information at your fingertips.
TRADE IDEAS IN DECEMBER '25 CORN
450 CALL
Buy December 450 Call 4 1/2
Price: 4 1/2 Cost: $225 Debit/Trade Package, Plus Fees and Commissions.
December’25 Corn Options Expire 11/21/265 (79 Days)
MAXIMUM LOSS: LIMITED
MAXIMUM GAIN: UNLIMITED
Buy 1 December 440 Call 6.62 1/2
Sell 1 December 470 Call 2 ¼
How The December 450 Call Works
For December corn futures, a trader buying the Dec '25 450 call at 4 1/2 cents will invest around $225 per contract plus commissions. This call option gives you the right to purchase corn futures at $4.50 per bushel regardless of how high prices may climb before expiration. The break-even price for this trade is calculated by adding the strike price plus the premium paid: $4.50+$0.045 = $4.545 per bushel. The market would need to rally approximately 12.7 cents from the current December futures price of approximately $4.18 to reach break-even. If December corn rallies above $4.545 by expiration, the trade becomes profitable. For example, if corn reaches $5.00, this call would be worth 50 cents or $2,500 per contract, resulting in a profit of $2,275 after subtracting the initial $225 investment. The main advantage of this trade, is the unlimited upside potential if we see significant weather concerns, export demand increases, or any bullish catalyst. Your maximum risk is limited to the $225 premium paid regardless of how far the market drops.
With current market volatility increasing and managed money holding substantial short positions that may need covering, this strategy offers excellent leverage on a potential rally with defined risk.
440/470 CALL SPREAD
Price: 4.37 1/2 Cost: $218.75 Debit/Trade Package, Plus Fees and Commissions.
December’25 Corn Options Expire 11/21/25 (79 Days)
MAXIMUM LOSS: LIMITED
MAXIMUM GAIN: 30 cents or $1,500/Trade Package minus Premium Paid
A trader buying the 440/470 call spread will pay $218.75 per contract plus commissions.
How the December 440/470 Call Spread Works
The net cost of 4.375 cents per bushel creates a break-even price of $4.44375 ($4.40 strike plus 4.375 cents premium). This requires a move of approximately 26.4 cents from current December futures trading around $4.18.
The maximum profit potential occurs if corn futures settle at or above $4.70 at expiration. In this case, the spread would be worth the full 30-cent difference between giving you a net profit of $1,281.25 after subtracting your initial investment for a 586% return in 79 days. This strategy offers a less expensive alternative to the outright call, reducing your cost basis by selling the higher strike call. While this caps your maximum gain at $1,281.25, it also reduces your break-even point compared to the $4.50 call. This trade is particularly attractive if you believe corn has upside potential but perhaps not beyond the $4.70. With current dryness concerns in key growing regions and disease pressure identified in crop tours, this defined risk position offers an excellent risk/reward profile while requiring less capital than outright futures positions. In both strategies, consider taking profits if corn rallies significantly before expiration, as time decay will accelerate as we approach the November 21st expiration date.
Hans Schmit, Walsh Trading
Direct 312-765-7311 Toll Free 800-993-5449
hschmit@walshtrading.com www.walshtrading.com
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.