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The Grain Report

RSS By: Sean Lusk, AgWeb.com

Market updates from Walsh Trading.

Tim Hannagan's Weekly Grain Report for July 11, 2014

Jul 11, 2014

 Hi this is Tim Hannagan it's Friday, July 11.   November soybeans made a new low today of 10.85 prior to today’s 11 a.m. USDA crop report which is almost a $1.60 off the June high. On the demand side our last weekly export sales report showed most of our demand is going for new crop delivery after September 1. So demand is not a driving force here. Important to note that after monthly crop report by the USDA we often see profit-taking profits. Should the shorts that are profitable in November contracts in soybeans decide to take their fair share we could see a move all the way back to 11.45. But should we continue here midmonth to price in weather and its impact on yields then we should expect that a close below 10.90 will set up the next moved to support of 10.50.  December corn is sitting right on its long-term trend line that goes all the way back to November of 3.90. A close under and 3.65 is next. But should this hold funds look to take profits for the month-end we could expect to move back to 4.10 possibly 4.22. As per wheat we were at 5.60 last January and funds were short a near record 120 thousand contracts leading to a short covering rally back to 7.40. As we entered last week we hit 5.60 with funds only short 61,000 contracts leaving over 40,000 contracts to come to the market. We expect the European nations loaded with high protein milling wheat to continue to under bid the U.S. making us a third or fourth port of origin for milling wheat. Our wheat low is not in yet.

For those interested I hold a weekly grain webinar each Thursday at 3pm. It is free for anyone who wants to sign up and link for sign up is below. If you cannot attend live a recording will be sent to your email upon signup.

Sign Up Now

 

Tim Hannagan

 Grain Analyst

  Walsh Trading

  thannagan@walshtrading.com

  888 - 391 - 7894

  312 - 957 - 8108

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Walsh Trading, Inc. is registered as an Independent Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. ("WTI") shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

 

 

Get Ready for Friday's USDA Report

Jul 10, 2014

Corn Traders: Get Ready for Friday's USDA Report

by Sean Lusk
July 9, 2014
 
The June quarterly stocks and acreage report released Monday June 30 didn’t give traders what they were expecting. Traders had thought that the extremely wet spring and late planting would lead to less corn and more soybeans being planted.

USDA News
The report basically showed ample acreage for both. The July 7 crop condition report had all key producers of corn and soybeans come in equal to or over the national average. The crop condition number exceeds the 10-year average. Needless to say, planted acreage, crop condition and weather all were and continue to be bearish for pricing. We have started off this week with lower prices on corn and soybeans on a cool wet 6 to 10 day forecast; however we should expect a buying opportunity with ample short covering with new buyers prior to Friday’s monthly USDA crop report.

Look for a pre-report rally as a good selling opportunity for corn, if weather cooperates. Should December continue to close under 4.20 it sets up 3.90 as a next major support, with 3.78 to follow.

Yield estimates for new crop corn remain conservative in my view until more is known about pollination in to mid-July. I see some analysts forecasting 170 bushels per acre. A yield this high would add a surprising 311 million bushels to last month’s production forecast. It is my belief that USDA should cut feed/residual use while increasing yield in months ahead, how much is the question? Weather and its effect will be the obvious determinant, as grain prices are 90 percent effected by weather at this time of year.

Two Trades
I propose two trades here, one futures and one options. For conservative traders, look at buying the September Corn 380 put for 8 cents or better. The cost is $400.00 which is the risk on the trade plus all commissions and fees. For more risk I propose selling futures on a pre-report or report day rally at or near 4.20 basis December. Risk a close over 4.38 if you get filled risking approximately $1,000.00 on the trade plus all commissions and fees. If weather continues to cooperate, rallies should be sold in my opinion.

Webinar
Walsh Trading’s Senior Grain analyst Tim Hannagan hosts a free grain webinar each Thursday at 3:00 pm central time. Tim has been ranked the #1 grain analyst in the United States per Reuters and Bloomberg for his most accurate price predictions for soybeans and corn in the years 2011 and 2012.
Registration is free and if you cannot attend live, a recording will be sent to your email upon signup. If you would like to receive a weekly invitation to our Webinars, please Subscribe and select Webinar Announcements and Recordings. Register now for Tim's weekly grain webinar on Thursday, July 10th.

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING.  THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT.  WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.

The Grain Report by Tim Hannagan 6/20/2014

Jun 20, 2014

 

THE GRAIN REPORT
by Tim Hannagan
Senior Grain Analyst, Walsh Trading

 

Monday’s crop condition report put corn at 76% good to excellent condition. This is 12% higher than one year ago. Bears in the market are projecting the largest crop in twenty years. Last year this time, we bought long soybeans seven consecutive weeks going into the weekend on adverse weather conditions. This year corn is on the reverse, due to the almost perfect weather conditions. But it is too early to get excited about big crops. Yields are made or loss during the pollination stage we have yet to enter. This is when corn needs two thirds of its growing cycle moisture to reach trend line yields. Should the heat dome in the south west move to the Midwest grain belt and stay for an extended period of time December corn could move back to its old 5.18 highs. But should this split jet stream stay in its same track through pollination, charts suggest December corn will move down to 3.90. 4.38 has been holding a strong support as it was a low from January 12th that started a rally to 5.18. A close under 4.38 sets up a test of 4.20. If 4.38 holds, the next resistance is 4.48 then 4.62. Technically we have now taken away the entire weather premium rally which started January 12th. Continue to trade corn based on the weather and its impact on crop development one week at a time. If they put in our weather premium high early off the cold wet spring, then they will put in the pre-harvest low early as well. We should expect a measurable harvest rally as end users, ethanol producers, feeders and exporters move in to get their share of cash grain that farmers have been holding on to tight for the last two years. Professional users cannot afford again to move into the cash market and pay big premiums as reflected on the Bull Spreads this year.

If you missed my weekly grain webinar from yesterday, you mayView a Recording. I will hold my next weekly grain webinar on Thursday, June 26 at 3:00 PM CST. Register Now. As always, please contact me with any questions or to discuss the market.

Tim Hannagan has more than  37 years of experience in commodity markets and is a nationally recognized expert on the grain markets. His opinions frequently appear in The Wall Street Journal, Barrons, Futures Magazine, Investors Business Daily, and other periodicals as well as international news wire services, online blogs, commodity news services and nationally televised networks.
 
Tim has not only helped his investor clients, but also the media, grain producers and corporate executives wishing to sense, identify and capture the slightest moves in the grain markets. His concise and analytical research reports appear every day.

CONTACT TIM 
Direct: 312-957-8108
Toll-free: 888-391-7894
Email: thannagan@walshtrading.com

Listen to Tim's Daily Agriculture Audio Commentary
Subscribe to Tim's Grain Report and his Weekly Grain Webinar
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING.  THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT.  WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.

Grains: Protect Both Sides with a Soy Strangle

Jun 11, 2014

Grains: Protect Both Sides with a Soy Strangle

by Sean Lusk
June 11, 2014

The USDA will be releasing two monthly reports on soybeans in June, with one released Wednesday and the other at month end which is a monster in terms of influence as it shows planted acreage numbers.

Stock and index following funds have made a killing this year buying old crop soybeans and selling new crop beans. The marketing year for beans is September 1. Recent price action in the spot months prior to June saw huge price discrepancies between spot months and forward contracts, most notably the September and November futures. Currently the July ‘14 is the front month contract and it enjoys almost a $2 premium to September and at one point last week, a $2.75 premium to November. Old crop beans are being bid up due to ending stocks at historic lows amid strong demand for both old crop and new crop soybeans from China and other Asian neighbors among others. Talk of old crop rationing is still in the market and funds are notorious for fearing bullish USDA reports.

The Commitment of Traders report the last three months has shown a huge build-up of long positions in beans, although there has been some washout or profit taking the last few weeks. July rolls off the board by month’s end leaving the August contract as the last contract before the new marketing year begins. Once these government reports are out of the way, weather and its effect on the bean crop becomes the primary pricing source for new crop beans, but an all-time low number for ending stocks off the next two government reports could send the August contract trading near the $15.00 handle, similar to what happened to the previous May and July contracts.

The question going forward is will the funds go to the well one more time during the summer growing season and play old crop, new crop, and bid up old crop beans to 15.00 and beyond? Or do significant planted acreage, agreeable growing season weather, and sizable global supply oil oilseeds finally take hold and drive August beans lower.

Those interested in playing be protected on both sides of the market and have positions on both sides of the market. I therefore suggest buying the August Soybean 1320 put and selling the August 1220 put against it while simultaneously buying the August Soybean 1500 call and selling the August Soybeans 1600 call for 15 cents or in cash value, a $750.00 cost. The strategy is called an Iron Condor and if need be here one can adjust the strikes on the trade to achieve a lesser risk. The risk on the trade is the price paid for the spread plus all commissions and fees.

Webinars
Walsh Trading’s Senior Grain analyst Tim Hannagan hosts a free grain webinar each Thursday at 3:00 PM CST. Tim has been ranked the #1 grain analyst in the United States per Reuters and Bloomberg for his most accurate price predictions for soybeans and corn in the years 2011 and 2012. Registration is free and if you cannot attend live, a recording will be sent to your email upon signup. Register now for Tim's weekly grain webinar on Thursday, June 12th.
 
Walsh Assetment Management will hold a Are Managed Futures the Right Investment for You? Webinar on Wednesday, June 11th at 3:30 PM CST. In this Webinar account managers Dan Keegan, Tony Marcucci and Ed Modla will discus the basics of managed futures as an alternative investment with a comparison to traditional investments. They will present definitions of managed products; what they are, how they work, and how they can fit in your portfolio. Register Now for Are Managed Futures the Right Investment for You? webinar on Wednesday, June 11th.
 
If you would like to receive a weekly invitation to our Webinars, please Subscribe and select Webinar Announcements and Recordings. 

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING.  THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT.  WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS. 

 

Corn, Seasonally turns up after Memorial Day

May 28, 2014

 By Sean Lusk, Director of Walsh Commercial Hedging Services

Contact Sean
312-957-8103 or 888-391-7894
slusk@walshtrading.com

Taking a look a closer look at corn, its numbers remain supportive.

USDA Data

Tuesday’s inspection report, a gauge of demand showed 45.7 million bushels were inspected to be shipped.  Anything over 40 million bushels is bullish as it keeps corn exports ahead of USDA projections. Last month’s USDA crop report raised exports and lowered our ending stocks for the fifth consecutive month, showing a stronger demand pace and talk of lower stocks on the June report.

Monday’s planting progress came in at 88 percent complete versus 73 percent last week and right at the five-year average. Key Midwest producers read like this: Illinois 95%, Indiana 87%, Iowa 96%, Missouri 97%, and Nebraska 97%.

On next Tuesday’s crop progress report the national average should read over 95%.  Then the psychology changes on weather. It's no longer weather and its impact on planting but weathers impact on emergence and eventual production.

Corn And Memorial Day

To date a warmer drier outlook meant a faster planting pace and lower prices. After this week, it’s bullish as timely rain is needed for good development. Seasonally corn turns up after the Memorial Day holiday. Support on September corn is 4.58 with resistance 4.90. Any move down towards 4.60 should be bought as that would be the worst case scenario before the crop is made.

Trading Levels

The close for September corn came in on Tuesday came in at 4.66 1/4.  For a longer term position trade I propose the following.  If futures trade down to 4.60 basis September, look at buying the September Corn 520 call and sell the Sep Corn 600 call for a purchase price of 6 cents or a $300.00 risk. The maximum profit on the trade is $4,000.00, if both strikes finish in the money at the time of expiration minus the cost of the spread and all commissions and fees. The risk on the trade is the price paid for the option spread plus all, commissions and fees.

 

LuskMay28.JPG
 

Webinar

For those interested in grains, Walsh Tracing’s Senior Grain analyst Tim Hannagan hosts a free grain webinar each Thursday at 3:00 pm central time. Tim has been ranked the #1 grain analyst in the United States per Reuters and Bloomberg for his most accurate price predictions for soybeans and corn in the years 2011 and 2012. If you cannot attend live, a recording will be sent to your email upon signup.

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING.  THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT.  WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.

 

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