Summary
As previewed in this Monday’s weekly note, we are adding to our agricultural commodity exposure with an additional position in wheat.
It’s been the driest April in the US grain belt since 1979 and ‘everyone’ is short wheat.
Latest NOAA drought map (from last Thursday) is already exhibiting large amounts of D3 and D4 impact (no bueno).
In a structure similar to the $DBA Acorn we have purchased a strip of $WEAT call options, with strike prices ranging from $6 (now 8% in-the-money) to $10 (now 53% out-of-the-money).
The wheat chart remains ugly in large part due to Russia’s jumbo crop depressing international prices.
This is an out-of-consensus call and the 🐿️ is a rodent, not a meteorologist. Size appropriately!
Long Grains: Part II
From the Acorn section of the 🐿️’s Monday Morning Notes this week:
DBA DBA (especially long grains): While everyone (wrongly in our view) focuses on the Black Sea grain initiative, a new weather update from Shawn Hackett (via the video below).
In the int…