Long Grains, Part II

A new 'mini' Acorn in wheat with interesting risk/reward dynamics.

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…