Walsh Pure Spreader
Pure Hedge Division
Rich Moran
May-August ’26 Soybean Oil Spread (ZLK26-ZLQ26)
Currently, we hold a long position in the March-July ’26 soybean oil spread (ZLH26-ZLN26) at -0.79 cents. With soybean oil yields dropping below average, it seems that going long on soybean oil spreads might be a wise move, especially since they haven’t strayed much above their 52-week lows lately.
With just about 5-6 weeks until the first notification date for March soybean oil (ZLH26), it’s worth considering the longer term potential for the May-August 2026 soybean oil spread (ZLK26-ZLQ26). This spread, too, is still close to its 52-week low but above the 14-day and 21-day moving averages. If you set a shortstop just under the 52-week low, you might face a minimal loss.
I’m thinking you might be able to purchase ZLK26-ZLQ26 for more than -0.13 cents (today’s settlement value) when trading starts on Monday evening. If the market opens higher, I suggest placing a static bid at -0.13. You’re already in a (theoretical) long position with ZLH26-ZLN26, so being patient could pay off. If you proceed with this trade, you can fine-tune your exit strategy. If you decide to go long on this spread, stop at -0.36 cents.
Past Trade Proposals Still Active
- 2026/1/14 ZWK26-ZWN26 (Wheat Spread from May to July 2026)
Today’s settlement stands at -11¾, with the 14-day moving average at -12 and the 21-day moving average at -11½. March wheat (ZWH26) closed today at 512¾, only 11½ cents above its 52-week low of 501½, and the May-July 2026 wheat spread (ZWK26-ZWN26) settled at -12½, just above its 52-week low of -13¼. This spread has been hovering around that range lately. It’s also not too far from both the 14-day and 21-day moving averages.
The latest release from the CFTC (January 9, 2026) indicates that managed money has a net short position in wheat at 107,165.00 units, more than any other grain. The forecast for the upper plains suggests a potential risk of winter dieback next week. Currently, ZWK26 to ZWN26 has 58% of full carry.
If you’re able to trade above both moving averages, it might be a good idea to go long on this spread. The potential risk versus reward at this level seems worth it. You could set a relatively short stop just below the most recent 52-week low. Personally, I’d avoid shorting wheat if managed money begins to exit these positions, especially with the risk of winter kill driving market interest.
So, I propose that if trading occurs above the 14-day and 21-day moving averages and closes positively, consider going long on this spread. You can decide the timing for executing this trade and determine your exit points.
- 2025/12/17 ZLH26-ZLN26 (Soybean Oil Spread from March to July 2025)
Today’s settlement: -0.86, with a long position at -0.79.
On Thursday (25/12/18) morning, right as the market opened, purchasing at -0.79 for ZLH26-ZLN26 (March-July Soybean Oil Spread) was possible. The trade peaked at -0.80. At that time, the bid for ZLH26 (January-March ’26 soybean oil spread) stood at -0.53. This results in a loss of 1 tick or $6.00 plus fees and commissions.
Risk 22 ticks (price -1.01) or $132, with a potential gain of 66 ticks (price -0.13) or $396 per spread, plus fees and commissions.
- 2025/11/14 ZCH26-ZCZ26 (March-December 2026 Corn Spread)
On Monday, January 12, 2026, ZCH26-ZCZ26 dropped to -25½ cents, then continued tumbling. This led to a 2 cent loss or $100 per spread, plus fees and commissions, getting stopped out at -25½ cents (on paper).
-23½ long
Previously, on November 14, 2025, I had recommended buying this spread when it opened at -23½ or higher. If not executed at that time, continue to bid -23½.
As of November 17, the spread from March to December 2026 began at -23 and traded down to -23¾, so you’re theoretically positioned long at -23½.
On December 9, 2025, given our current significant lead on this spread, I recommended adjusting the stop (on paper) to -25½.
New parameters: 2 cents (price -25½) or $100 at risk 23½ cents (price -½) results in $1,175 per spread, plus fees and commissions.
- 2025/11/12 KEH26-ZWH26 (March 2025 Kansas City-Chicago Wheat Spread)
On December 23, 2025, KEH26-ZWH26 reached +11 cents and settled there, thus achieving the target of +9½ cents, yielding a profit (on paper) of 24 cents plus fees and commissions, or $1,200 per spread.
-14½ long
Hard Red Winter Wheat minus (-) Soft Red Winter Wheat is commonly referred to as the Kansas City-Chicago Wheat Spread.
On November 13, 2025, the KEZ25-ZWZ25 spread opened at +¼ and traded up. One could have sold an even number or zero (par). As a result, this would involve rolling a long position on KEZ25-ZWZ25 at -14½ and a long position on KEH26-ZWH26 at -14¼.
New parameters: On December 17, 2025, due to our significant lead on this spread, I recommend lowering the stop again (on paper) to -6½. This gives you a profit of 8 cents or $400 (initial risk of the trade).
New parameters: We aim for 8 cents (price -6½) = $400, or to earn 24 cents (+9½ price) = $1,200 per spread, plus fees.
- 10/1/2025: SBH26-SBK26 (MAR-MAY’26 Sugar #11 Spread)
Today’s settlement: 0.42, long is at 0.42. Back on 10/1/25, I mentioned that once the sugar market opened, placing a bid above that day’s settlement value (42 cents) would be a good idea.
The market opened at 0.41 on 10/2/25, so we are long at 0.42.
To target 50 cents (price 0.92) or $560.00 per spread plus fees, you’re looking at a risk of 24 cents (price 0.18) or $268.80 per spread.
