The Ted Spread
Ted is the Chief Market Strategist and Vice President in charge of the Zaner Ag Hedge Group and specializes in agricultural hedging employing various strategies using futures, futures spreads, outright options and option combinations. He believes it is paramount to be able to use different strategies to adapt to market conditions. Ted works with large to mid size grain and livestock producers and end users in North, Central and South America.
Corn Still Holding Support... For Now.
Oct 30, 2012
TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
For the 3rd day in a row corn closed right on top of its 100-day moving average. So far this support has held very well as corn has not had a close below it since June 6th. And, corn has also been holding the recent low of $7.32 (December) as we have touched it 3 times and not broken below. However, the bounce of these key support numbers has thus far been underwhelming and if corn can not put more distance between itself and this support then eventually the door may open for a move to test $7.00 or even the gap between $6.75 - $6.85.
Fundamentally it is hard for me to wrap my head around the bullish argument. Demand seems very week form all sides. Supply is tighter then in years past but that has been known now for some time and that story might be old news. Before we can get re-excited about a tight supply situation we may need to go down and buy some demand back first.
I have a trade recomendation in corn that I really like that goes through the election and the next USDA report, let me know if you would like the details.
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Soybeans have broken their 100-day moving average, in fact this has now become a strong level of resistance. Soybeans tried to break out over the 100-day moving average again early last week but failed. This was followed by a sell off that was capped by Monday's 34 cent decline. Soybeans today fought to take back some of yesterday's losses but closed closer to the lows than the highs leaving beans up 7 cents. Ultimately, soybeans failed to get back over even the 10 and 20 day averages. This can be called a "dead cat bounce" after yesterday's sharp sell off.
Soybeans might have the best fundamental story right now as the US is the only real supplier at the moment. Last week beans were supported by rains in South American hampering planting progress. Slower planting progress in South America could mean that the US will have to carry world demand further but now the forecast has dried out and planting has resumed and those rains last week helped charge subsoil moisture. Soybeans could certainly see a sharp rally if a big importer would come in and make some big purchases but I really think that those big purchases only happen if there is a problem with the SA crop. If weather continues to look good and the crop progresses on schedule it is likely that most end users are going to only book what they absolutely need to get them through the SA harvest and then stock up on cheaper SA beans.
CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=tseifrie
With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.
December Corn Daily chart:
November Soybeans Daily chart:
All this means that speculators should be looking for opportunities and producers need to look to lock up some prices while we have new crop corn above $7.00 and new crop soybeans above $15.00. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent.
Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs.
Ted Seifried (312) 277-0113 or firstname.lastname@example.org
Please check out my Blog at: http://tedseifriedfutures.com/
Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=Seifried
Futures, options and forex trading is speculative in nature and involves substantial risk of loss. This commentary should be conveyed as a solicitation for entry into derivitives transactions. All known news and events have already been factored into the price of the underlying commodities discussed. The limited risk characteristic of options refers to long options only; and refers to the amount of the loss, which is defined as premium paid on the option(s) plus commissions.
FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STRIKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR EVEN MOVE IN THE OPPOSITE DIRECTION