Societe Generale Closing Corn, Soybean Spread Trade

Societe Generale said today it’s closing spread trades on Chicago Board of Trade corn and soybean futures, after the bets on narrowing spreads reached the bank’s targets.

In corn, the bank said it will exit a position recommended May 30 to short September futures and go long in the December contract. Since then, the spread has narrowed to 10 cents a bushel from 29 cents, Chris Narayanan, a Societe Generale analyst in New York, said in an e-mailed report. The spread was as wide as 46.75 cents on July 19, the most since August 2012.

“We recommended this trade on the premise that part of the new and large crop should be available in September or in the coming weeks after as harvest progresses north,” Narayanan said in the report. “The need to pay a premium for immediate delivery would lessen. In recent days, this spread has collapsed, hitting our target.”

Corn futures for September delivery settled today at $4.72 a bushel, while the December contract was at $4.64.

Societe Generale also said it closed its soybean spread trade in which it recommended selling September futures and buying the November contract. Narayanan said he recommended the trade in June when the spread between the contracts was at 44.5 cents a bushel. Today, the price gap settled at 31.25 cents, after last week moving as low as 24.25 cents.