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Long Rice Recommendation
Random indeed. Admittedly I don’t know much about the rice market, but here’s what I do know.
- Rice has been in a bear market since May of 2025. Has fallen over 50%.
- Futures tested the 2018…yes 2018, lows. Futures have rebounded off this level with conviction.
- You have to go back to 2006 to find an extended period of time where futures <$10.00
- Large speculators are MASSIVELY short this market.
- Large spec selling has pushed this market lower (see below)
- Coming off a record net short, large specs have turned into aggressive buyers.
- 4 consecutive weeks and 5 of the last 6.
- BOTH Short liquidation and now 3 weeks of increased new longs.
- Technically futures posted a key reversal up on 12/18, which has been tested and held since then.
Admittedly we are a bit late to this party, but everything is setup for a sharp rally and prices remain historically low.
Entry: Buy 1 March futures, at the market to enter.
Risk Exit: A close under 10.25. Realistically, major support is at 9.55-9.65 if you want to give it more room.
Target: $12.50 – $13.50. Purely technical.
Graphics:
Monthly Most Active Futures
Long Corn Recommendation
I have no idea what could spark the corn market higher, but nobody ever does or it would already be higher. Stepping back, here are a few observations. And I want to be absolutely clear, this is a spec trade and not indicative of a bullish outlook for corn.
- In general the news (supply side) is overwhelmingly bearish. The market knows it and the sell off stalled after Monday’s USDA report.
- The demand side is extremely encouraging, the export and shipment pace both point to revisions higher for the USDA final export total.
- Feed and Residual, big question mark on that YoY increase.
- Spec/commercial spread tells us nothing.
- March futures are within 15¢ of their contract low. 30¢ from their Nov. high.
Because we’re not particularly bullish at this moment, more looking at the fact that corn is ‘cheap’ and bearish fundamentals appear to be built into the market, we want a low cost, low risk, long strategy. If you are on the opposite side of this and want to look to short corn, the 420 puts are also ~5¢.
Entry: Buy 1 March 425 call option, trading at ~5¢.
Risk Exit: None, total risk is premium paid.
Target: Given that we’re 25¢ below pre-report prices, a 50% retracement ($4.33) or 100% ($4.48) seem reasonable. Breakeven on this strategy is ~$4.30, a level we could easily take out in the next 30 days.
These options expire on 2/20, 30 DTE.
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