Bearish Bets on Agriculture Stocks Surge Before USDA Crop Report Tomorrow

Trading of bearish options on agricultural stocks jumped for a second day, reaching a four- month high, before the U.S. Department of Agriculture releases its monthly global supply and demand estimates tomorrow.

Almost 5,300 options to sell the Market Vectors Agribusiness exchange-traded fund changed hands, 22 times the four-week average and 18 times the number of calls to buy. The ETF fell 0.1 percent to $45.55 as of 4 p.m. in New York and has surged 26 percent since falling to a one-year low on July 1.

Soybeans fell from an eight-month high in Chicago on speculation that the report will show that U.S. supplies are adequate to satisfy domestic and global demand. Corn rose to a 23-month high and wheat advanced.

Almost all of today’s volume was concentrated in October $44 puts after 5,200 of the contracts changed hands at 11:46 a.m. today at the ask price, which indicates that buyers initiated the transaction. Nearly all of yesterday’s 2,601 trades were in October $43 puts.

The ETF tracks 44 companies. Potash Corp. of Saskatchewan Inc., Deere & Co., Wilmar International Ltd. and Monsanto Co. account for a third of the fund’s value.

The USDA will update its crop forecast tomorrow at 8:30 a.m. in Washington.

To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.

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