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November 2012 Archive for Hedging Corn and Soybeans

RSS By: Howard Tyllas, AgWeb.com

Howard Tyllas is currently a member of the Chicago Board of Trade and registered with the Commodity Futures Trading Commission as a floor broker and as a Commodity Trading Advisor.

Hedging Corn and Trade Ideas for 11/29/12

Nov 30, 2012

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Are you tired of listening to the same BULL ****, and services that do not have a plan if the market goes down instead? Hedge means to take risk off the table, and my service has all producers 100% hedged and they do have most of the upside unhedged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 36 years.

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This report was sent to subscribers on 11/28/12 3:30 p.m. Chicago time to be used for trading on 11/29/12.

December 2012 Corn

After the close recap on 11/29/12: My pivot acted as resistance and was 7.60 1/4, .02 3/4 (only .00 1/4 in open outcry) from the actual high, and my support was 7.51 1/2, .00 1/2 from the actual low.

All charts and numbers for 11/30/12 have already been sent to subscribers at 3.30 pm.

December 2012 Corn


7.73 ¼ FG
7.69
-----------7.60 ¼ Pivot
7.51 ½
7.46 ½

5 day chart.... Up from last week same day
Daily chart ... Sideways
Weekly chart ... Sideways
Monthly chart .... Up 6.60 is the 200 DMA
ATR 12 ½ Ex. Overbought 94%

Daily numbers support and resist, downtrend line at $7.60 is a key pivot now.

In my daily December 2012 corn numbers on Wednesday my pivot acted as resistance and was .03 from the actual high; my support was .03 ¼ from the actual low.

For 11/29/12:

Grains: I made it clear I wanted to sell charts like these, taking the sell signals only and why. Soybeans overnight traded $.01 ¾ of its 200 DMA and failed to even "jab" above there to get some buy stops (including ours), and sold off from there. In open outcry in the morning soybeans went to $.00 ¼ from my pivot, sold off giving $.06 for a long time to take a profit. Later in the day it went exactly to my pivot and sold off from there providing another profitable opportunity. I have the same thoughts for today.

The corn market at the same time soybeans made the high in the morning made its high, and was tested and failed at the same time soybeans did late in the day. Unless the market can close above the gap at $7.82, the closer we get to $7.76 the more of a "sell" it is. Selling the downtrend line and not getting stopped out was one thing, now it's above the downtrend line even at the same price (because the downtrend line gets lower daily), and so the bulls are still in position to test $7.76. With my approach the downtrend line is the focus when in play, and now it acts as a pivot with $7.76 being the sideways resistance for months (the bigger picture resistance).

1/3 of my producers have moved some or all $7.20 puts to $7.50, and we did them for $.12 or less which means they "banked" $.18 or $900 per contract minus 1 commission, not concerned anymore about the $.12 or $600 remaining on the table. These are March puts, and much could happen but one thing is certain, they have $900 per contract in their pocket, and not friendly enough to think the market has better than a 50/50 chance to close above $7.50 ten weeks from now. They also know that this $.18 is not a spin your wheels hedge anymore; they got all the money down to $7.20, so anything more is now "new earned income". Most have.... Subscribe now

As I say every year, each producer should know his own cash market better than any other source, including farms just 50 miles away. It is something that only you should make decisions on.

I will say again, I would lock in inputs costs as well as an option strategy that locks in at least the first $.60 down. Look at 2013 corn and soybean prices, it depends on if you rent or own, or both, but with the rents I am hearing, locking in something is more compelling than any other year. Otherwise you will be begging the landowner to adjust your rent with prices at $5 corn and $11 or less soybeans. Look at the soybean price and corn price for 2013. I would plant pillar to post corn if I could. Night and day profitability, and with the loan support in place and not part of the farm bill, I would be profitable crop or no crop, just buy the maximum insurance. "IF" there is a dust bowl, crop insurance will give you the biggest payout on record prices that could produce record profits with no crop at all. And if you do have a crop when the rest do not, you win the lottery twice.

Depending on price, there could be 100 million acres planted, and with an average let alone above average yield, $4 corn here we come! Mother Nature is the only one who knows what the result will be. You would think soybeans will go higher to compete for acreage, but it did not really happen in 2012, they just planted enough to satisfy both markets. SA is on its way to a record crop and only, Mother Nature; tell me who wins the Super Bowl this year too? My strategy locks in $.60 "at the money" and allows for at least $.80 up unscathed, and then sold only $1 away of any price move higher than that.

I still say "I want to take the sell signals only today and use the support numbers to take profits but not go long. I want to risk $.04 in corn and $.06 in soybeans using a buy stop to protect".

11/28/12:

Grains: Nobody knows when the chart level will not hold, in this case the resistance, but I would never "cheerlead" it to be this time, the odds as you have seen show that the amount of times it holds lets you profit greatly when it does, and risk a minimum amount when it does not. Even if it held just half the time, you should be well ahead on what you made when it did versus the stop loss when it did not.

Nobody can be certain in predicting where we will be 1 week from now, even just higher or lower than here, but in my 40 years I have seen the charts be able to greatly improve on the 50/50 chance of up or down from here, and project where the "run" will end. It is much better than being random using fundamentals.

So I look at the charts everyday and plan trade ideas before I make them, and am patient to wait for chart levels that improve my chance to be profitable, no matter long term or day trade. If I am in the middle of a sideways pattern I am not aggressive, but at the sideways range support I want to take the buy signals, and at the ranges resistance I want to take the sell signals. It does not matter the market.

Corn managed to kiss the downtrend line and closed there to make it pivotal today. It deserves taking a sell signal, and if stopped out the first resistance I would sell again. How many contracts to trade depends on what you think about the market, and if I was a bull my way of being short would be to exit my long. For producers though it means to lock in some of what the market gave you, if not you will be losing what the market has put in your hand. The March $7.50/$7.20 put spread settled at $.11 5/8 which means you can lock in $.18 3/8 minus 1 commission. That is what you are risking to get the last $.11 3/8. I take profits for a living, and take money off the table as I get to my objective. I am not concerned with the $.11 3/8 to be made, I am concerned with losing the $.18 3/8. If I am going to gamble, I would take a fresh trade idea that would risk $.11 3/8 to make $.18 5/8, not keep this risk/reward which is opposite. Think casino owner, end bets not in your favor, or when the risk is more than the reward the casino would close the "game", I exit trades.

As I said before, you can always try to buy the spread let's say $.04 cheaper, but if it goes the other way you will pay $.01 ½ more but do it anyway. I can justify that, risk $.01 ½ to make $.04, but sitting on your hands to get it cheaper and watching it get to $.20 and prohibited then going after $.10.

The January $7.60 call settled at $.16 ¼, $.04 is intrinsic value now (worth at expiration at Tuesday's settlement price of $7.64), $.12 ¼ is premium. If that was the last day, producers (and speculators using a long futures contract) would save the $.11 5/8 not spent on the $7.50/7.20 put spread. $900 on a 20 contract hedge is putting $18,000 in your pocket now; I am not concerned with risking that to get $12,000 more. Mindset, risk/reward, and my approach of having chart criteria to enter and exit my ideas have not changed in decades.

All what ifs are the same, and nobody on the floor had a clue as to why we rallied, and just took old talking points that pinned the tail on the story. Soybeans made a new high for the run tonight and filled the gap, but the market failed just $.01 ¾ from getting to the 200 day moving average, a number I would sell without hesitation, and the risk of $.06 I would gladly lose going after the reward from here. If the bulls can get through there, another opportunity to sell will be at the bracket line resistance of $14.74 ¾ but above there the bulls are back in command.

Bottom line if producers do nothing, if corn is here or higher most will make at least $.20 or $1,000 more per contract than if they would have sold cash instead of rolling to March. Soybeans $.20 to $.50 more than selling cash instead. Lastly, you can always sell cash on a rally and exit your hedge; you should make at least $.10 by doing so now rather than when rolled. In a week or 2 if still at this level, the calls will be worth much less and you could add that to what you would make selling cash now. I want to take the sell signals only today and use the support numbers to take profits but not go long. I want to risk $.04 in corn and $.06 in soybeans using a buy stop to protect.

11/27/12:

Grains: This morning grains were in a buying mood with nice gains when open outcry began, but with willing sellers at first resistances. Not exactly a bull market, but one that "grinds" higher if for no other reason than the market is breathing in (going up). It went down and tested the gap at $7.04 five trading days ago and failed twice that week, and so it was time to crawl back up. This is not your bull market that ended just 2 months ago. Now we are seeing the "bottom pickers". This is what is allowing the market to attempt to rally to a resistance level that I would be willing to sell, and for producers an ideal time to lock in more profits. For weeks I have said we will remain in the same parameters, and we have. I say "things do what they do until they do not do it anymore" so I continue to think the parameters will hold, until they do not anymore.

Producers or speculative shorts "covered" somewhere near $7.20-7.30 for the most part, and are long once again even if it is just for $.20 to start with. My producers only left a few cents on the table when they rolled their hedges from $7.90+ to March put spreads, so they got that money in their pocket now, and get to start over putting themselves in a position that if the market can rally, they will make more money. This is a hedge, not really gambling on it rallying, the gamble is NOT having enough put protection. We will make more money if it does rally, or at least give us a chance to sell a Feb call and then a March call to add income and more than pay for the March put spread we have on, and even collect more premium than that if we can capture some of the rally by extending up the put to an "at the money" put. How else can you sell or hedge and not be obligated other than using options, and there is no better strategy I know in markets that are volatile than the one we are using.

Since you are long again now that the market has rallied above your put spread, you are back on stage of the game show called "Deal or no deal". The put spreads are for March expiration and have 3 months remaining, so they move slowly relative to the underlying futures contract, unlike the January options that expire 3 weeks from this Friday which move relatively quickly. All corn put and call options near the money closed down for the day, taking out the weekend time decay, and a sign the market is not expected to do much either way up or down. The March $7.50/$7.20 put spread closed at $.13 ¾, so it is almost a 50/50 payout collected now, instead of going after 100% and maybe getting zero, deal or no deal?? This is up to you entirely, the gamble for not rolling is if the market is below $7.20 on expiration you lost $.15, and if it is above $7.50 on expiration you made $.15 (by not spending to extend up from $7.20 to $7.50). At 50/50 it is easy to reflect your bias of the market in the next 5 weeks, if bullish do not extend the put, if bearish you should do so.

As a trader it would depend on how many I have on and money that is at risk as well as locking in my reward because the market rallied. If I had only a few and was bullish, I would try and see if the market could rally where I can buy the put spread for $.10, thereby locking in $.20 and leaving the $.10 that was left to gain. No matter what I thought I would only keep a few because now I would be risking the $.20 in hand to make the last $.10, NOT what a casino or I would do! But if I had 20 contracts, I would do 10 even if bullish, because I want to "lock in" $7,500 (by extending the $7.20 put to $7.50) because I do not want to risk $15,000, so by doing half (10 contracts) I am putting $7,500 in my pocket and risking only $7,500. Everyone has their own threshold of pain (or becoming emotional), I know mine, and you know yours. Bottom line, never risk more than you are willing to make. One way of reflecting that would be to risk $.01 ½ to try and buy that spread $.04 cheaper. I would still do half at 50/50% ($.15 for $.30) and risk the other half no matter risking a little to buy it cheaper, or if I had a conviction look for even more or not need to extend at all due to a better than expected rally. These thoughts I apply to my futures trading as well, I just applied it to options after they were introduced and traded in Chicago on the trading floor.

Keep a journal and keep in touch with your true thoughts, and reality. I prefer to take the sell signals at resistance rather than buying supports. I continue to say "I want to day trade the market without bias and risk $.04 in corn and $.06 in soybeans using a stop to protect any idea".

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The markets now covered daily are Soybeans, Corn, and S&P's.

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Disclaimer: No guarantee of any kind is implied or possible where projections of future conditions are tempted. Futures trading involve risk.In no event should the content of this be construed as an express or implied romise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.

Trade Ideas for 11/12/12

Nov 13, 2012

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Are you tired of listening to the same BULL ****, and services that do not have a plan if the market goes down instead? Hedge means to take risk off the table, and my service has all producers 100% hedged and they do have most of the upside unhedged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 36 years.

If you are a producer and want to learn a better way to hedge, call or email me, and Sign up: Free 1 Day Trail of Daily Numbers & Trade Ideas

 

This report was sent to subscribers on 11/9/12 6:30 p.m. Chicago time to be used for trading on 11/12/12.

December 2012 Corn

After the close recap on 11/12/12: My pivot acted as resistance and was 7.41 3/4, .01 3/4 from the actual high, and my support was 7.11 3/4, .00 3/4 from the actual low.

All charts and numbers for 11/13/12 have already been sent to subscribers at 3.30 pm .

December 2012 Corn

7.69 near Downtrend Line Resistance
7.63 ½
7.51 ½
-----------7.41 ¾ Pivot
7.32 ¼ XX
7.11 ¾
7.04 FG Use the same numbers as used on 11/ 7,8 & 9 /12
5 day chart.... Down from last week same day
Daily chart ... Down
Weekly chart ... Up
Monthly chart .... Up 6.50 is the 200 DMA
ATR 13 ¾ Oversold 19%

I continue to say "Downtrend line at $7.71 is major resistance, $7.32 ¼ is support, and the gap at $7.04 is key support, bracket line gap at $6.74 ¾ is major support".

In my daily December 2012 corn numbers on Friday my resistance was .03 ½ from the actual high; my support was .01 ¼ from the actual low.

For 1/12/12:

Grains: On Friday, corn made a new high for the week before sellers took over and pounded the market down to close slightly lower for the day, and $.00 ¾ lower for the week. Considering soybeans lost $.75 for the week, corn continues to show strength for whatever the reason. The reason was not the report, which came in as expected for corn, but for me it is $7.32 ¼ holding each of the last 5 weeks. If that goes I would expect another retest of the gap at $7.04. If something is truly bullish underlying in the corn market horizon, $7.32 ¼ is where they are buying whatever you are selling. If it were not for soybeans getting crushed this week, corn probably would have closed on the downtrend line threatening the bears.

Bearish report for soybeans immediately put pressure on soybeans and the high after the report was the first resistance at my support number of $14.85 ¾ (high was $14.86). Before the first 5 minutes ended soybeans were down $.30, this caused pressure on corn which sold off down to within $.01 ¼ of the crucial support of $7.32 ¼ and held once again. The next 2 ½ hours the corn market rallied $.03 ½ over my first resistance number and traded over it for almost an hour in spite of soybeans not being able to come too far off its low. The reason for the explanation of Friday's price action is to give you a feel of the strength of the corn market on a day that was not good for grains including wheat which was $.14 higher and ended the day $.16 lower.

Soybeans look to at least try and fill the gap at $14.38, which could put pressure on corn to at least get the sell stops below $7.32 and "see" what is down there. Further soybean pressure could send corn to test the gap at $7.04 once again. $7.32 ¼ is "Custer's Last Stand" for the bulls before they will regroup at $7.04 to defend their position. I would buy cheap upside at $7.04, looking for a rally before the January report.

Soybeans are now $3.37 off its high on 9/4/12, which once again proves that fundamentalists who predict prices based on soybean yields that are nothing more than guesses from people who cannot accurately predict a year like this until the combines rolled. I have said that since March. These are the same fields that they walked through and are "experts", but like I reported on every one of my producers who told me, they were all surprised getting a higher yield that they thought looking and testing their fields 24 hours before combining. Bulls can argue all they want, and if they have a plan that takes care of the risk if they are wrong, then no problem, but if they do not, they are becoming their own victim.

I have warned you time and again throughout every year of my service, about controlling risk, and not risking too much on any trade (or hedge) idea. Soybeans are at risk to more downside as time goes on, due to the fact there is 1 less day for a weather problem to develop in SA. If SA comes out with a good crop, soybeans will be trading well below $14, and by March if subsoil moisture is back to normal in the US, under $13 should be seen until yields look to be less at risk, and then $11 is more than likely. Adverse weather is the only way for higher prices than we are seeing now. I continue to urge 2013 crop to be hedged even though we are now at the lower end of the range at support of $13.20, I have been recommending to hedge and not wait to see if the flood gates open.

Economic uncertainty cannot be ruled out in the grain underlying fundamental picture. Post election selloff in the equities markets would spook me if I was a bull. I point out every year of the economic meltdown in 2008 taking the grains with it. I have always seen throughout my career, when the stock markets goes down greatly, commodities sell off because it is the first "risk" that people take off to free money to defend their leveraged stock position. It should not surprise you that people who speculate in commodities speculate with leveraged positions in stocks.

All you see, read, and hear out there mostly talk their trade ideas and what they will make if they are right, but most all shy away from talking about the risks, what they are doing to reduce them, and have a plan to not lose more than a reasonable amount on the trade or hedge idea if they are wrong. Risk is my number one priority and the main focus of any trade or hedge idea I have. My risk is the amount it costs to see if the chart level and number hold, and the strategy or price stop defends a loss from getting out of control. My reward is if the market can rally for whatever the reason, and then can make more money than the original hedge.

My producers and subscribers should be well protected down to at least $6 in the December corn options, and at this stage of the game still waiting and want to see if the market can rally. If not, we would like nothing more than to see the market come down as much as it can while we are fully protected. That would also allow us to "bank" some of the hedge, and start over at a lower price level, and an easier place to rally from. $.60 put protection will be better at $6 than trying to protect $7.50. I want to hedge 2013 corn for the same reason as the soybeans, I do not want to wait to see if the flood gates open, and this is a profitable place to lock in prices as well as "input costs" which have also come down greatly as did corn prices.

I am still bearish, but cautious. I want to trade the numbers without bias and risk $.04 in corn and $.06 in soybeans using a stop to protect any idea.

11/9/12:

Grains: With 2013 corn trading at $6.36, if you have not hedged some or all of your 2013 corn by now, I would not hesitate to get started. SA is getting it in slowly, but moisture is not a problem, in the US the eastern Corn Belt is getting out of drought conditions nicely, but the west is far from over their dry problems. With $6+ corn, it will surely attract acreage in the US, and we could easily double the carryout for 2013/2014. $4.50 corn will be in order then. So the risks are great not locking in such a high price and one that has never been seen in November.

If the corn numbers are within 50 MB of what the average guess is, will be a non event, and certainly not a market mover, but it is the January report, the one that should answer all the questions, that could be the big mover and shaker. Not just for a limit move, but $1.50 or more in corn and $3 in soybeans in one direction or the other. For that reason I would not expect this or next month's report will drive prices beyond my parameters before the January final report. You know I am bearish longer term, but I am not expecting more of a commitment than the charts allow at supports, for the bears at this time. In January with numbers that look like what have now, I can see another leg down going into planting intentions in March, but the cash basis firm reflecting the rationing process, and front month futures losing more ground to the back months. That will encourage producers to hold longer (basis will get stronger) and being paid for storage December to March will make even more reason to hold the corn.

I want to hedge 2013 corn and soybeans and feel like time might be running out. With everything going on in the world and with our own country in continued deadlock, the risks are one that I have abandoned any thoughts of thinking the rewards outweigh the risks at this time for "commodities" to perform well from the current price levels. If the US and world economies do not improve, how can you sustain demand at such a high price? Look at the gas pump and you clearly see what demand does at high prices, and how low prices can generate demand.

I will be at my desk at 7am, market opens at 7:20, and the report is out at 7:30. They should have at least a 20 minute close when the report comes out to level the playing field, in the past I have not been able to get the numbers for at least 5 minutes after they came out, they know there is a problem, and they are trying to fix the problem. They went to the moon and back, but they cannot fix the problem. I want to trade the numbers without bias and risk $.04 in corn and $.06 in soybeans using a stop to protect any idea. Unless you trade at an extreme number and also have a stop in when placing the order, I would not trade the first 5 minutes after the report comes out. I would also use a 5 minute bar and look at my numbers before I implement my trade idea. I will get the report out as soon as it is available.

11/8/12: Grains: For days the corn market has looked like it wants to go higher, as well as soybeans look like it wants to go lower, I still believe we will remain in my price parameters until in time we go much lower. If weather in SA or 2013 crops look threatened, I will be talking about how high we can go.

My first priority has always been the risk, which is my number one concern as a trader, and as an advisor to the farm manager who is responsible for marketing their farms grain. Not making more money is one thing I can live with, but losing what I got is another. Unhedged farmers do have the last trade price to lock in, so the risk is to the downside from here. Today's price is a windfall profit for an unhedged contract, so locking in today is locking in what the market gave you, if it goes down no harm is done, if it goes up you have the upside you allowed in my strategy. Being unhedged is gambling penny for penny and you have no control of the market, but the market does have control of you.

Whenever you did hedge, most in December 2011 at $5.50, everyone was locking in a very good income if they got an average trend yield for their farm. Turned out so far that $8 or more have been locked in by most of my producers, minus the cost to get you there, which depended on how bullish or bearish you were, and how you morphed. But even the biggest bear made at least $1.20 more including commissions than their original hedge. The average hedge has locked in at least $7.20 free and clear. They have been protected from day one, and have been in control of risk, have much less stress, which allowed pursuing more upside without the stress from that too knowing they have protection.

Now bulls are faced with deeper losses, and could be a victim of outside events such as the fiscal cliff. I really do not care the reason it goes down (or up), but being a bull (or a bear) without a plan is an accident waiting to happen, and it could be deadly. I could close my eyes and see the ghosts of aspiring traders at the CBOT. Yes, I want to scare you, because I have always known that losses are the only thing that kills you in this game, not because you did not make enough money for the move or the year.

Grain action looks like the market expects soybean numbers will be bearish, and corn numbers bullish, but the charts remain within my parameters. I still say "I prefer to take the sell signals but I want to trade the market without bias and risk only $.04 in corn and only $.06 in soybeans on any idea using a stop to protect".
 

 

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The markets now covered daily are Soybeans,Corn, and S&P

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Howard Tyllas

Put yourself in a position to make money, use the daily numbers service!

Email: dailynumbers@futuresflight.com
http://www.futuresflight.com/

Tel.1-312-823-9189

Disclaimer: No guarantee of any kind is implied or possible where projections of future conditions are tempted. Futures trading involve risk.In no event should the content of this be construed as an express or implied romise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.

WASDE Report for 11/9/12

Nov 09, 2012

Sign up: Free Learn a better way to hedge for farmers

Are you tired of listening to the same BULL ****, and services that do not have a plan if the market goes down instead? Hedge means to take risk off the table, and my service has all producers 100% hedged and they do have most of the upside unhedged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 36 years.

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WASDE Report for 11/9/12

OILSEEDS: Total U.S. oilseed production for 2012/13 is projected at 91.4 million tons, up 3.2 million from last month due to higher soybean, peanut, and cottonseed production. Soybean production is forecast at 2.971 billion bushels, up 111 million from last month. The soybean yield is forecast at 39.3 bushels per acre, up 1.5 bushels as several states show the benefit of late-season rainfall. Soybean crush is raised 20 million bushels to 1.56 billion based on increased soybean meal export prospects. Soybean exports are raised 80 million bushels to 1.345 billion reflecting larger supplies and the strong pace of sales through October. Soybean ending stocks are projected at 140 million bushels, up 10 million from last month. 

Soybean oil supplies for 2012/13 are raised this month as increased production more than offsets lower beginning stocks. Soybean oil domestic use is projected at 18 billion pounds with biodiesel use projected at 4.9 billion pounds. Soybean oil stocks are raised 250 million pounds to 1.52 billion on increased supplies.

Prices for soybeans and products are all reduced this month. The U.S. season-average soybean price range is projected at $13.90 to $15.90 per bushel, down 35 cents on both ends of the range. The soybean meal price is projected at $455 to $485 per short ton, down 15 dollars on both ends of the range. The soybean oil price range is projected at 51 to 55 cents per pound, down two cents on both ends.

Global oilseed production for 2012/13 is projected at 462.1 million tons, up 4.4 million tons from last month. Global soybean production accounts for about 75 percent of the increase with larger crops projected the United States and Ukraine. Increased harvested area and yields are projected for Ukraine as harvest nears completion. Global rapeseed production is raised due to larger crops in EU-27 and Belarus. Other changes include increased sunflowerseed production for Ukraine which is more than offset by reductions for Argentina and EU-27. Indonesia palm oil production is increased for both 2011/12 and 1012/13 based on increased area and yield projections.

Global oilseed trade for 2012/13 is projected at 114.7 million tons, up 2.4 million with increased soybean exports projected for the United States and Ukraine. Soybean imports are raised for several countries including China, Taiwan, EU-27, and Turkey. Global oilseed crush is raised 3.3 million tons to 392.4 million with higher projections for soybean crush in China, the United States, and EU-27, higher sunflowerseed crush in Ukraine, and higher rapeseed crush in China and Belarus. Increased crush results in higher projections for global vegetable oil and oilmeal production, trade, use, and stocks. Vegetable oil stocks are raised 2.5 million tons to 15.3 million with Indonesia palm oil stocks accounting for about half of the increase.

WHEAT: Projected U.S. wheat ending stocks for 2012/13 are raised 50 million bushels this month. Exports are projected 50 million bushels lower reflecting the slow pace of sales and shipments, and an outlook for increased foreign competition. Projected U.S. exports are lowered 25 million bushels each for Hard Red Winter (HRW) and Soft Red Winter (SRW) wheat. Projected all-wheat imports are unchanged, but imports are projected slightly higher for HRW wheat with an offsetting reduction made for SRW wheat imports. The projected range for the 2012/13 season-average farm price is narrowed 10 cents on both ends to $7.75 to $8.45 per bushel.

Global wheat supplies for 2012/13 are projected 1.9 million tons lower. Beginning stocks for 2012/13 are lowered 0.3 million tons. Higher 2011/12 feed and residual disappearance in EU-27 and lower production for China account for most of the reduction in global 2012/13 beginning stocks. Higher 2011/12 production for Pakistan and lower exports for Australia raise 2012/13 beginning stocks for both countries and partly offset the reductions for EU-27 and China. 

Global wheat production for 2012/13 is lowered 1.6 million tons. Production is reduced 2.0 million tons for Australia as continued dryness during grain fill in October further reduced yield prospects in western and southeastern growing areas. Production is also lowered 0.3 million tons for Turkey based on the latest confirmations that cool, wet weather during the early growing season delayed development, increased disease problems, and lowered yields in the country?s central growing region. Small increases are made in production for Pakistan, EU-27, and Algeria.

Global wheat trade is raised for 2012/13, reflecting the continuation of strong shipments from the Black Sea region and India, and the growing competiveness of wheat from the EU-27. Exports are raised 2.0 million tons for Ukraine, 1.0 million tons each for EU-27 and Russia, and 0.5 million tons for India. Partly offsetting these increases is a 1.5-million-ton reduction for Australia with the smaller expected crop and the 1.4-million-ton reduction projected for U.S. exports. Imports are projected 2.7 million tons higher with increases for China, Egypt, EU-27, Israel, Kenya, and Mexico.

Global wheat feeding for 2012/13 is lowered 2.5 million tons with reductions for EU-27, Russia, Ukraine, South Korea, and India. Small increases in expected wheat feed use for Egypt, Israel, and Japan limit the global decline. World wheat ending stocks for 2012/13 are projected 1.2 million tons higher with increases for the United States, Pakistan, China, and Egypt. Lower stocks are projected for Ukraine, Russia, Turkey, and Australia. At the projected 174.2 million tons, global stocks remain 46.0 million tons above the recent low in 2007/08.

COARSE GRAINS: U.S. feed grain supplies for 2012/13 are projected slightly higher with small increases forecast for corn and sorghum production and higher projected corn imports. Forecast corn production for 2012/13 is raised 19 million bushels with a 0.3-bushel increase in the corn yield to 122.3 bushels per acre. Sorghum production is forecast 4 million bushels higher, also on a higher yield. Projected corn imports are raised 25 million bushels reflecting expectations for more shipments, particularly into the southeastern feed market which ordinarily relies heavily on supplies from the eastern Corn Belt. Corn food, seed, and industrial use for 2012/13 is raised 17 million bushels with higher use projected for sweeteners and starch. Corn ending stocks are projected 28 million bushels higher at 647 million. The season-average farm price for corn, at $6.95 to $8.25 per bushel, is projected 20 cents lower at the midpoint, mostly reflecting a lower-than-expected September price and the continuation of weakness in cash and deferred futures prices over the past month.

Global coarse grain supplies for 2012/13 are projected 1.8 million tons higher with larger corn carryin stocks for EU-27 and Mexico, and higher corn production in the United States. Corn production for 2011/12 is raised 0.9 million tons and 0.6 million tons, respectively, for EU-27 and Mexico. Additional increases for South Africa, Guatemala, and Brazil boost global corn production 2.7 million tons to a record 880.5 million for 2011/12. Global coarse grain production for 2012/13 is raised 0.9 million tons with a number of largely offsetting foreign changes made this month. 

Global 2012/13 corn output is raised 0.7 million tons to 839.7 million. Despite the sharp drop year-to-year, 2012/13 production is projected to be the second highest on record supported by record high foreign output. Corn production is raised 0.6 million tons for Guatemala, 0.5 million tons for Russia, and 0.4 million tons each for Indonesia and Turkey. Corn production is lowered 1.0 million tons for EU-27 and 0.8 million tons for Mexico. Sorghum production is raised 0.4 million tons for Argentina, but lowered the same amount for Mexico. A 0.2-million-ton increase in EU-27 barley production is mostly offset by small reductions for Argentina and Algeria. EU-27 oats production is lowered 0.3 million tons, but rye production is raised a similar amount.

Global 2012/13 corn imports are raised 2.8 million tons with increases for EU-27, United States, South Korea, and Mexico. Russia corn exports are raised 0.3 million tons for the 2012/13 marketing year. Also supporting higher 2012/13 marketing year imports are higher 2011/12 marketing year exports for Brazil and South Africa, up 2.0 million tons and 0.3 million tons, respectively. (The 2011/12 marketing years for Brazil and South Africa run through the end of February 2013 and April 2013, respectively.) Sorghum imports for 2012/13 are raised 0.2 million tons for Mexico with exports for Argentina raised the same amount. Barley imports for 2012/13 are raised 0.5 million tons for Iran supported by increases for EU-27 and Russia exports. Global corn feeding is raised 3.1 million tons with increases for EU-27, Indonesia, South Korea, Guatemala, and Russia. World corn ending stocks for 2012/13 are projected 0.7 million tons higher at 118.0 million.


SUGAR: Projected U.S. sugar supply for fiscal year 2012/13 is increased 613,000 short tons, raw value, compared with last month, due to higher beginning stocks, production, and imports from Mexico. The increase in beginning stocks reflects final data reported in Sweetener Market Data (SMD). Production in Louisiana is increased based on forecast higher sugarcane yields. Larger projected shortfall in filling the U.S. tariff rate quota is more than offset by higher imports from Mexico. Domestic consumption is lowered slightly, in line with the revised lower data in SMD. For Mexico, higher 2012/13 carryin stocks and projected production are based on government estimates. Mexico?s domestic use and ending stocks are raised in line with increases in 2011/12 final data.

LIVESTOCK, POULTRY, AND DAIRY: The forecast for 2013 red meat and poultry production is reduced from last month, largely reflecting lower beef and pork production. However, the broiler production forecast is raised slightly. Lower cattle placements in second-half 2012 are expected to result in lower steer and heifer slaughter in first-half 2013 as fewer fed cattle are available for slaughter. Pork production is forecast lower than last month on slightly lower expected weights. Broiler production is forecast slightly higher in the first quarter of 2013 as the hatchery data points to a smaller-than-expected reduction in birds for slaughter. Turkey and egg production forecasts are unchanged from last month. For 2012, the red meat and poultry production forecast is raised from last month as higher broiler and turkey production more than offsets lower red meat production. September broiler production was higher than expected and the production forecast for the fourth quarter is raised. The beef and pork production forecasts are lowered for the fourth quarter. Fed cattle slaughter is forecast slightly lower although cow slaughter is expected to remain near third quarter levels. Hog weights are reduced as weights have recently fallen below year-earlier levels. Turkey and egg production changes reflect data through September although hatching egg production is forecast higher for 2012.

Beef imports and exports are reduced for 2012 based on the pace of trade, but are unchanged for 2013. Pork exports are raised for 2012 and 2013. Poultry export forecasts are raised for both 2012 and 2013 on strong sales to a number of markets.  

Cattle prices are raised for both 2012 and 2013, reflecting tight supplies of fed cattle through the end of this year and into 2013. The hog price for fourth-quarter 2012 is reduced slightly on current prices, but the forecast for 2013 is unchanged. Broiler prices are raised for both 2012 and 2013 as demand has been stronger than expected. 

The 2012 milk production forecast is raised on higher estimated milk per cow in the third quarter, but production forecasts for the remainder of 2012 and 2013 are unchanged from last month. Fat basis exports in both years are reduced largely on lower butterfat exports, but skim solids export forecasts are raised, largely due to whey protein product sales.  

Cheese prices are forecast lower in 2012, but the forecast is unchanged for 2013. Butter prices for both 2012 and 2013 are lowered as butter stocks are forecast higher than last month. Nonfat dry milk is forecast higher for both years. The whey price forecast is unchanged for 2012 but is raised for 2013. The Class III price for 2012 is unchanged, but the Class IV price forecast is lower on weaker butter prices. For 2013, higher whey and nonfat dry milk prices push the Class III and Class IV price forecasts higher. The all milk price is forecast at $18.50 to $18.60 per cwt for 2012, unchanged from last month, but the forecast for 2013 is raised to $19.10 to $20.00 per cwt.

COTTON: This month?s U.S. 2012/13 cotton forecast shows slightly higher production, resulting in a marginal increase in ending stocks. Production is raised 160,000 bales, as increases in the Southeast and Delta more than offset a reduction for the Southwest. Domestic mill use and exports are unchanged. Ending stocks are raised 100,000 bales to 5.8 million. The forecast range for the average price received by producers of 64-72 cents per pound is narrowed 2 cents on each end.

Slight revisions to the global supply and demand estimates also result in marginally higher ending stocks. World production is raised 500,000 bales, reflecting increases for Uzbekistan, the United States, and some African countries. World consumption is reduced 500,000 bales, mainly in China, where free supplies are tightening due to the accumulation of production in the national reserve. World trade is raised marginally from last month. Forecast world ending stocks now exceed 80 million bales. 

RICE: U.S. all rice production in 2012/13 is forecast at 198.5 million cwt, 0.3 million below last month due to a decrease in yield. Average all rice yield is estimated at a record 7,417 pounds per acre, down 11 pounds from last month. Harvested area is unchanged at 2.68 million acres. Long-grain rice production is lowered 0.2 million cwt to 139.8 million, and combined medium- and short-grain production is lowered 0.1 million to 58.7 million. The import forecast is raised 1.0 million cwt to 20.5 million, all in long-grain, as the September U.S. trade data reported by the Census Bureau showed a large quantity from Vietnam.

On the use side, exports are raised 3.0 million cwt to 103.0 million with long-grain exports raised 4.0 million and combined medium- and short-grain exports lowered 1.0 million to 72.0 million and 31.0 million, respectively. Combined milled- and brown-rice exports are raised 3.0 million to 70.0 million and rough rice exports are unchanged at 33.0 million. Larger exports of long-grain rice are expected to Western Hemisphere markets, including Colombia and Mexico, and smaller exports of medium-grain rice are expected to Turkey. No changes are made to domestic and residual use of rice forecast at 127.0 million cwt. All rice ending stocks are forecast at 30.1 million cwt, down 2.3 million from a month ago, and a decrease of 11.0 million from the previous year.

The 2012/13 long-grain, season-average farm price range is projected at $13.70 to $14.70 per cwt, up 50 cents on each end of the range from last month. The combined medium- and short-grain farm price range is projected at $16.50 to $17.50 per cwt, unchanged from a month ago. The all rice season-average farm price is forecast at $14.50 to $15.50 per cwt, up 30 cents on each end of the range. An increase in export demand, for long-grain rice, along with expected stronger South American rice prices will help to support U.S. prices during the market year. Additionally, the National Agricultural Statistics Service (NASS) has reported monthly prices for long-grain rice for August and September that have averaged about $13.90 per cwt for the first 2 months of the market year, up 6 percent from last year. NASS reported the preliminary October long-grain price at $14.10 per cwt.

Global total use of rice for 2012/13 is lowered more than the decrease in total supplies resulting in a slight increase in world ending stocks. World rice production is lowered 0.8 million tons to 464.3 million, down slightly from the previous year. The drop in global production is due mostly to lower production forecasts for Bangladesh, Thailand, and South Korea, which are partially offset by increases for Uruguay and Vietnam. Global exports for 2012/13 are raised about 100,000 tons mainly due to increases for the United States and Uruguay which is partially offset by a reduction for Argentina. Global imports are raised 1.3 million tons mainly due to a 900,000-ton increase for China. Imports are also raised for Colombia, Thailand, South Korea, and the United States. The increase in China?s imports is mainly sourced from Vietnam to the southern provinces. The differences in the marketing years for importing and exporting countries account for the difference in trade volume. Global 2012/13 ending stocks are projected at 102.2 million tons, up 0.3 million from last month, but 3.6 million below 2011/12. Forecast ending stocks are lowered for Bangladesh, Brazil, South Korea, Sri Lanka, and Vietnam, but raised for China, India, Iraq, and Indonesia.

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Disclaimer: No guarantee of any kind is implied or possible where projections of future conditions are tempted. Futures trading involve risk.In no event should the content of this be construed as an express or implied romise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.

Hedging Corn & Soybean and Trade Ideas for 11/2/12

Nov 04, 2012

 Sign up: Free Learn a better way to hedge for farmers

Are you tired of listening to the same BULL ****, and services that do not have a plan if the market goes down instead? Hedge means to take risk off the table, and my service has all producers 100% hedged and they do have most of the upside unhedged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 36 years.

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This report was sent to subscribers on 11/1/12 3:25 p.m. Chicago time to be used for trading on 11/2/12.

December 2012 Corn

After the close recap on 11/2/12: My resistance was 7.63 1/2, .01 from the actual high, and my support was 7.36, the EXACT actual low.

December 2013 Corn

After the close recap on 11/2/12: My resistance was 6.43 1/2, .01 3/4 from the actual high, and my support was 6.33 1/2, .00 1/2 from the actual low.

All charts and numbers for 11/5/12 have already been sent to subscribers at 3:25 pm .

                                            
December 2012 Corn    

                                        
7.73 ¼ FG                 ($7.80 Downtrend Line Resistance)            
7.69                                           
7.63 ½
-----------7.52 ½             Pivot        
7.41 ¾                    
7.36                  
7.32 ¼ XX         

          
5 day chart....         Up from last week same day                                                            
Daily chart   ...       Down                     
Weekly chart ...     Up                   
Monthly chart ....  Up                      6.45 is the 200 DMA
ATR 13 ½                                               Balanced 61%

For 11/2/12: Downtrend line at $7.80 is resistance, $7.32 ¼ is key support.             

In my daily December 2012 corn numbers on Thursday my resistance was .00 ¼ from the actual high; my support was .04 ½ from the actual low.                   

December 2013 Corn         

6.47
6.43 ½                                
-----------6.38 ½          Pivot 
6.33 ½                         near Uptrend Line Support                           
6.30 ½                    
         

5 day chart....         Up from last week same day                                                            
Daily chart   ...       Sideways                    
Weekly chart ...     Up                   
Monthly chart ....  Up                     5.84 is the 200 DMA
ATR 8 3.4                                              Balanced 71%

                                      

For 11/2/12: I continue to say "Daily numbers are resistance now, uptrend line at $6.35 is strong support, and then $6.20".             

In my daily December 2013 Corn  numbers on Thursday my resistance was .02 from the actual high, my pivot acted as support and was the EXACT actual low.                    
 
1/2/12:

Grains: All soybeans could do was rally to get us back almost where we were last Friday on settlement. The last 3 days of last week were the only times in the last 5 weeks to close above $14.60, and Thursday's rally sold off from near last week's high. Not exactly a bull market, more like the market I have been describing as a sideways market waiting for more unknowns to become known. I am saying that it will be difficult to take out resistances, same difficulty it was to take the supports of my chart parameters. They could not take out supports; I think the market will not be able to take out resistances either. That is the same as what I have been saying, the market will continue to rotate up and down between chart parameters until January unless weather in SA turns adverse.   

December corn struggled to maintain the gains as the day wore on, and now struggles to maintain the gain for this week, after rallying to $.00 ¼ from my resistance number. Closing lower bodes well for another down day to follow on Friday. Nothing needs to be done, if the market rallies from here you will have more windfall profits, and if it breaks down all my producers have $2 protection for the most part. $8/$7.50 or higher put spreads are not close to their intrinsic value (in the money value), and with 3 weeks remaining that will start to change, options spreads in the money will gain more value, out of the money will lose more value.

I expect us to just sit here and be bored; if it goes down we are fully covered, and if it goes up we will make more income. The alternative to our hedge is having unhedged grain that is $7.50, and become a gambler penny for penny up and down. The days the market is sharply higher I am sure the unhedged farmer is a pleasure to be with, but when the market is sharply lower... just ask his wife. Do not let the market dictate your mood swings, be in control, and risk what you feel comfortable with on the ideas you have, using our strategy that controls risk. Even if you do nothing, you have a chance to update and reflect your current thoughts on every "roll" before expiration.      

You can always reflect your bullishness or bearishness, and you now know many ways to reflect it, and you also have the ability to compare more than one way of doing it, like sell a call or spread, or buy a put spread, or both to reflect bearishness. With some option knowledge I say "OPTIONS DO NOT TELL YOU WHAT TO DO, BUT IF YOU HAVE A CONVICTION NO MATTER BULLISH, BEARISH, OR NEUTRAL, IT IS EASY TO SELECT THE STRATEGY AND STRIKE PRICES THAT REFLECT EXACTLY WHAT YOU THINK".

I want to trade the market without bias and risk only $.04 in corn and only $.06 in soybeans on any idea using a stop to protect.    

1/1/12: I went to vote today; there is an old saying in Chicago, "vote early and vote often".

Grains: My premise for a corrective bounce to the upside held true, and people did buy back many of the $8.30 and $8.50 calls and sold a few $8 calls to pay for them. Now producers have bullets in their gun just in case they see any bulls come into their sights at the gap of $7.73 ¼ and the downtrend line at $7.80, or the gap at $16.01 in November soybeans. If we get near those levels before or after the report next week, I would not hesitate to sell some calls back to add income. There just is no reason before the January report to carry these market higher than that. 

I am reluctant to think we can rally to current resistances, but the chart looks 50/50 it can do it. I would rather see it get the rally out of the way, get some calls sold, and then I do not care if it breaks down once again towards testing supports again. I would like it even more if we can rally past the strong resistances we are using, especially my producers who are bearish but in position now to make even more income if we do rally. Who does not like to make money when you are wrong the market? I expect to make money when I am right, but I really like making money when I am wrong!

10/31/12: Grains: Just about all December corn options closed lower as well as most December soybean options such as the $16 call closed down $.01 1/8. This tells me that for now, soybeans are not expected to get back to $16 in the next 3 ½ weeks until expiration. Since they are worth half or less than what it was sold for a few days ago when rolled from November, I would like to buy some of them back as a cheap way to get long, with the intentions if it rallies to sell it back. Everyone has been selling premium and rightly so, but when there is not much left like the December corn options that are $.01 or less now, I want to buy them back, sell fewer calls just above the put owned, to collect what I paid to buy them back, keeping all premium originally sold.

Bottom line: There is too much time for too little reward without making an adjustment. Next Friday is the November report but I want to free up some calls this week, first notice day in November soybeans is today and can move the market, also it is the end of the quarter and funds get paid based on equity on the close today. Also, crop insurance is pegged today, and my quick glance is $7.50 corn and $15.40 soybeans which would make people who took out the most crop insurance will make out well even without a crop at all. 

The market has stabilized the last 4 weeks and bears have not been able to take out the supports, so since markets "breathe", the next breath would be to "inhale" higher and test the resistances once again, even though resistances are now at lower levels than the bulls would like to think. I want to trade the market without bias and risk only $.04 now in corn and only $.06 in soybeans since the ATR's continue to come down.

10/30/12: Grains: November soybeans gave back all of last week's gain and then some. December corn did hold my strong support number of $7.32 ¼, but if that goes look for deeper losses. December 2013 has a strong uptrend line support at $6.31 now, but $6.20 is significant and acts like Dec 2012 $7.32 ¼. Friday's settlements are now resistances.   

I think the market is being rationed at today's prices, and that is the reason we are trading sideways inside my parameters, and holding up here where I still consider this to be a high price for current known and unknown fundamentals. The what if's remain in place for the future like they always do, but that should not be comforting to the bulls as they watch prices under pressure, and if my support numbers at the gaps of $14.74 ¾ (SX) and $7.04 and $6.74 ¾ (CZ) go, blood will be on the street as lower prices will be forced by people who realize the losses they just endured and face much more without a plan or worse yet, no risk control. If those gaps go, once again the market will have produced bankruptcies from people without risk control who will utter the words "I never thought that it could go down so much", and have no plan which means they never had control of themselves, but they expected to be able to control price.  

Want to know what I think for tomorrow and going forward?

The markets covered daily are Soybeans, Corn, and S&P's.

HowardTyllas Daily Numbers & Trade Ideas cover markets for less than $10 a day.

HowardTyllas Daily Numbers & Trade Ideas is designed to help you plan your trading strategies for the coming day.

$199.00 USD for each month, renewable monthly

HowardTyllasDaily Numbers & Trade Ideas $ 199.00

If clicking on the above link does not work please copy and paste the following in your browser:

https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=D5MG7VPCUWW2N

 

Howard Tyllas

Put yourself in a position to make money, use the daily numbers service!

Email: dailynumbers@futuresflight.com
http://www.futuresflight.com/

Tel.1-312-823-9189

Disclaimer: No guarantee of any kind is implied or possible where projections of future conditions are tempted. Futures trading involve risk.In no event should the content of this be construed as an express or implied romise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.

Sign up: Free Learn a better way to hedge for farmers

Are you tired of listening to the same BULL ****, and services that do not have a plan if the market goes down instead? Hedge means to take risk off the table, and my service has all producers 100% hedged and they do have most of the upside unhedged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 36 years.

Want to know

Sign up: Free 1 Day Trail of Daily Numbers & Trade Ideas

This report was sent to subscribers on 11/1/12 3:25 p.m. Chicago time to be used for trading on 11/2/12.

December 2012 Corn

After the close recap on 11/2/12: My resistance was 7.63 1/2, .01 from the actual high, and my support was 7.36, the EXACT actual low.

December 2013 Corn

After the close recap on 11/2/12: My resistance was 6.43 1/2, .01 3/4 from the actual high, and my support was 6.33 1/2, .00 1/2 from the actual low.

All charts and numbers for 11/5/12 have already been sent to subscribers at 3:25 pm .

                                            
December 2012 Corn    

                                        
7.73 ¼ FG                 ($7.80 Downtrend Line Resistance)            
7.69                                           
7.63 ½
-----------7.52 ½             Pivot        
7.41 ¾                    
7.36                  
7.32 ¼ XX         

          
5 day chart....         Up from last week same day                                                            
Daily chart   ...       Down                     
Weekly chart ...     Up                   
Monthly chart ....  Up                      6.45 is the 200 DMA
ATR 13 ½                                               Balanced 61%

For 11/2/12: Downtrend line at $7.80 is resistance, $7.32 ¼ is key support.             

In my daily December 2012 corn numbers on Thursday my resistance was .00 ¼ from the actual high; my support was .04 ½ from the actual low.                   

December 2013 Corn         

6.47
6.43 ½                                
-----------6.38 ½          Pivot 
6.33 ½                         near Uptrend Line Support                           
6.30 ½                    
         

5 day chart....         Up from last week same day                                                            
Daily chart   ...       Sideways                    
Weekly chart ...     Up                   
Monthly chart ....  Up                     5.84 is the 200 DMA
ATR 8 3.4                                              Balanced 71%

                                      

For 11/2/12: I continue to say "Daily numbers are resistance now, uptrend line at $6.35 is strong support, and then $6.20".             

In my daily December 2013 Corn  numbers on Thursday my resistance was .02 from the actual high, my pivot acted as support and was the EXACT actual low.                    
 
1/2/12:

Grains: All soybeans could do was rally to get us back almost where we were last Friday on settlement. The last 3 days of last week were the only times in the last 5 weeks to close above $14.60, and Thursday's rally sold off from near last week's high. Not exactly a bull market, more like the market I have been describing as a sideways market waiting for more unknowns to become known. I am saying that it will be difficult to take out resistances, same difficulty it was to take the supports of my chart parameters. They could not take out supports; I think the market will not be able to take out resistances either. That is the same as what I have been saying, the market will continue to rotate up and down between chart parameters until January unless weather in SA turns adverse.   

December corn struggled to maintain the gains as the day wore on, and now struggles to maintain the gain for this week, after rallying to $.00 ¼ from my resistance number. Closing lower bodes well for another down day to follow on Friday. Nothing needs to be done, if the market rallies from here you will have more windfall profits, and if it breaks down all my producers have $2 protection for the most part. $8/$7.50 or higher put spreads are not close to their intrinsic value (in the money value), and with 3 weeks remaining that will start to change, options spreads in the money will gain more value, out of the money will lose more value.

I expect us to just sit here and be bored; if it goes down we are fully covered, and if it goes up we will make more income. The alternative to our hedge is having unhedged grain that is $7.50, and become a gambler penny for penny up and down. The days the market is sharply higher I am sure the unhedged farmer is a pleasure to be with, but when the market is sharply lower... just ask his wife. Do not let the market dictate your mood swings, be in control, and risk what you feel comfortable with on the ideas you have, using our strategy that controls risk. Even if you do nothing, you have a chance to update and reflect your current thoughts on every "roll" before expiration.      

You can always reflect your bullishness or bearishness, and you now know many ways to reflect it, and you also have the ability to compare more than one way of doing it, like sell a call or spread, or buy a put spread, or both to reflect bearishness. With some option knowledge I say "OPTIONS DO NOT TELL YOU WHAT TO DO, BUT IF YOU HAVE A CONVICTION NO MATTER BULLISH, BEARISH, OR NEUTRAL, IT IS EASY TO SELECT THE STRATEGY AND STRIKE PRICES THAT REFLECT EXACTLY WHAT YOU THINK".

I want to trade the market without bias and risk only $.04 in corn and only $.06 in soybeans on any idea using a stop to protect.    

1/1/12: I went to vote today; there is an old saying in Chicago, "vote early and vote often".

Grains: My premise for a corrective bounce to the upside held true, and people did buy back many of the $8.30 and $8.50 calls and sold a few $8 calls to pay for them. Now producers have bullets in their gun just in case they see any bulls come into their sights at the gap of $7.73 ¼ and the downtrend line at $7.80, or the gap at $16.01 in November soybeans. If we get near those levels before or after the report next week, I would not hesitate to sell some calls back to add income. There just is no reason before the January report to carry these market higher than that. 

I am reluctant to think we can rally to current resistances, but the chart looks 50/50 it can do it. I would rather see it get the rally out of the way, get some calls sold, and then I do not care if it breaks down once again towards testing supports again. I would like it even more if we can rally past the strong resistances we are using, especially my producers who are bearish but in position now to make even more income if we do rally. Who does not like to make money when you are wrong the market? I expect to make money when I am right, but I really like making money when I am wrong!

10/31/12: Grains: Just about all December corn options closed lower as well as most December soybean options such as the $16 call closed down $.01 1/8. This tells me that for now, soybeans are not expected to get back to $16 in the next 3 ½ weeks until expiration. Since they are worth half or less than what it was sold for a few days ago when rolled from November, I would like to buy some of them back as a cheap way to get long, with the intentions if it rallies to sell it back. Everyone has been selling premium and rightly so, but when there is not much left like the December corn options that are $.01 or less now, I want to buy them back, sell fewer calls just above the put owned, to collect what I paid to buy them back, keeping all premium originally sold.

Bottom line: There is too much time for too little reward without making an adjustment. Next Friday is the November report but I want to free up some calls this week, first notice day in November soybeans is today and can move the market, also it is the end of the quarter and funds get paid based on equity on the close today. Also, crop insurance is pegged today, and my quick glance is $7.50 corn and $15.40 soybeans which would make people who took out the most crop insurance will make out well even without a crop at all. 

The market has stabilized the last 4 weeks and bears have not been able to take out the supports, so since markets "breathe", the next breath would be to "inhale" higher and test the resistances once again, even though resistances are now at lower levels than the bulls would like to think. I want to trade the market without bias and risk only $.04 now in corn and only $.06 in soybeans since the ATR's continue to come down.

10/30/12: Grains: November soybeans gave back all of last week's gain and then some. December corn did hold my strong support number of $7.32 ¼, but if that goes look for deeper losses. December 2013 has a strong uptrend line support at $6.31 now, but $6.20 is significant and acts like Dec 2012 $7.32 ¼. Friday's settlements are now resistances.   

I think the market is being rationed at today's prices, and that is the reason we are trading sideways inside my parameters, and holding up here where I still consider this to be a high price for current known and unknown fundamentals. The what if's remain in place for the future like they always do, but that should not be comforting to the bulls as they watch prices under pressure, and if my support numbers at the gaps of $14.74 ¾ (SX) and $7.04 and $6.74 ¾ (CZ) go, blood will be on the street as lower prices will be forced by people who realize the losses they just endured and face much more without a plan or worse yet, no risk control. If those gaps go, once again the market will have produced bankruptcies from people without risk control who will utter the words "I never thought that it could go down so much", and have no plan which means they never had control of themselves, but they expected to be able to control price.  

Want to know what I think for tomorrow and going forward?

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Howard Tyllas

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Disclaimer: No guarantee of any kind is implied or possible where projections of future conditions are tempted. Futures trading involve risk.In no event should the content of this be construed as an express or implied romise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.

 
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