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The Ted Spread

RSS By: Ted Seifried, AgWeb.com

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.

Planting Progress 6/11

Jun 11, 2012

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY 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.   

 

Planting Progress 6/11

The USDA released the weekly Crop Progress report this afternoon.  With hot and dry conditions at the end of last week, traders are looking closely at the effect that might of had on the condition of crops.  However, many of the dry areas did get some rains today.  With the monthly USDA supply/demand and crop production report coming out tomorrow the effect of this report may be short lived.

The biggest factors for direction in the near term will be weather and the USDA report tomorrow.  If weather turns wetter in weeks to come then we could be getting near highs for the next few months, however if a hot and dry pattern persists we could continue to rally prices for now.

When Does Weather Matter: http://www.zaner.com/offers/?page=6&ap=tseifrie

Corn condition did take a hit from the hot and dry conditions late last week.  The USDA is reporting the corn crop at 66% good to excellent down 6% from last week at 72%.  This represents an 11% drop in conditions over the past three weeks.  Also, corn conditions are 3% lower in the good to excellent category then last year which was at 69% at this time.

See December Corn Daily chart:

Wheat numbers were mixed with the Winter Wheat crop condition improving by 1% to 53% good to excellent compared to 52% last week and 35% last year.  Spring wheat conditions declined 3% to 75% good to excellent compared to 78% last week and 68% last year.

CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=tseifrie

See December Wheat chart:

The USDA is reporting a 5 % decline in soybean conditions at 60% good to excellent compared to 65% last week and 67% last year.

See November Soybean Daily chart:

The reaction to this report could be slightly bullish for corn and soybeans because of the 6% and 5% drop in the good to excellent category respectively, however the crop still looks good as long as weather cooperates in weeks to come.  Wheat could find a mixed reaction with winter wheat conditions improving slightly and spring wheat conditions declining.  Here again though, both winter wheat and spring wheat conditions are good overall. 

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 in the $5.30 range and new crop wheat in the $6.70 range. 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 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.

Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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

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