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July 2013 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?

Jul 18, 2013

  

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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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HEDGING

 6/28/13: Grains: As the years go by it makes it easier to see the things I consistently say, and with repetition it goes from one ear out the other, to witnessing it happen time and again and now cannot be ignored, to actually excepting the wisdom and using it. It cannot be ignored when I say "I do not care what brings the market to a chart level, I want to exploit it". The market was playing the drought game and thought highly improbable that conditions would improve, and some actually saying it would get worse. What have they done since we got all the rain and then some, and conditions were improving every week, they did nothing but instead are playing the too wet game. A bull is a bull. Now conditions from Canada to the Gulf of Mexico up and down from the western Iowa border eastward is completely out of drought conditions and are now considered "normal".  

For a trader or a farmer, this is a classic example of trading and predicting weather, they are two different things. Are you trying to predict weather, or take advantage of the market no matter what the fundamentals that made it go up or down including everything else? You have learned how to factor the "what if" at all times into your option strategy, so taking a stance that has no control of risk like many are as they seek some arbitrary number to take profit (and then most never do because they raise the goalpost higher), is bankruptcy waiting in time to take you out of the game. 

There are major problems with hedge services, and one is that they seem afraid to sell because they are more worried about the market going higher and someone will sell for more than they recommended, but they should be much more worried about the market going down and losing money that way. It does not matter if the next farm got more money or less money, what should only matter is what YOU get. If you got $6, it is $6 no matter if your neighbor got $7 or $5, you still got $6. If your happiness depends upon what your neighbor got, well then you were born a farmer I guess. My producers have learned, happiness comes from what you do, not others. If you got $6 and your neighbors got $7 makes you unhappy, and next year you get $5.50 and your neighbors got $5 and you are happy, you need to listen to me or go see a psychiatrist. $6 and you are unhappy, and $5.50 the next year and you are happy, you need to take hold of common sense and logic and sit down with yourself and think about it. Mindset is a big part of trading or hedging successfully, because when you cannot do what you want to do, knowledge becomes meaningless. When you have enough experiences, and now that you know what to do and not do, it will lead to wisdom or you babbling to yourself about why you cannot do what you are supposed/want to do.    

Hedge, the meaning of the word is so simple, it means to reduce risk, and my strategy that we are using is also very simple, and everything that is reflected in the strikes used, can be changed or "MORPHED" as time goes on. You are in complete control, and you are only hedging what put spread is bought and the call spread strikes sold, everything else in price is unhedged. If you have a crop failure and need to back out of the "rights" you have used to hedge, it is very easy to do so. Unlike committed cash sales, there are no consequences for "lifting" your hedge. 
 
The problem with the word "hedge" being used by many sources is that they seem to not know the simple meaning of the word. It means to "take risk off the table", certainly not to add risk, and that is what is being done in so many ways. We hedged last year at $6.50, why, because it was $6.50. No problems for us to have left some upside open to seek more. Their problem is losing more money than what would have been gained if they were right and the market went up. Next problem is until hedged they still have risk. That is not a good plan for risk as a trader, nor as a hedger. Throwing your hands up like a baby and say "if I don't get at least $5.50 for my corn, then I am just going to take my bat and ball and put it away until next year" is not a plan to hedge!     
 
Talking a week ago like a bull with their horns out, now are getting very uneasy and emotional and want to "start" to hedge worried now what they should have been in the first place, what if the market goes down. That is why you hedge, because you want to reduce your risk. They were not hedging, they were GAMBLING and what is worse is that it is with YOUR MONEY if you listen to them. 5 years ago I went into much more detail about the fundamentals, and that is when the analysts were not that far apart in their guesses, but as you have seen over the years and especially the last 2 years, I am off that game, no good comes from things the more they are a guess. I have seen the harm fundamentals do in 40 years for the herd who are trying to justify keeping them in a losing position longer than they should have been. You have learned from me that you can totally control what you do, and control your risk at the same time, and have learned to look at it like you should when it comes to marketing any product, the price, the risk if not sold, and the reward for waiting for a higher price. Not the reasons why the market should go higher, and throw your hands in the air if it does not. I remind you all year long that farmers and speculators should never assume that they can just do what they want and then just hope that it all works out for the best; if they failed to plan, then they planned to fail. 
  
We hedged December 2013 corn 100% last year at $6.40 and $6.50, and we have always had some protection and a plan to pursue the upside cheaply, what was in all these services plans that you could call it a hedge?  I do not have a problem trying to sell it $.40 higher, but I am not going to watch the market go down more than $.40 and do nothing. If I thought it could go down the same as going up, I risk nothing and just hedge (or exit the trade there). At $6.50 if I was looking for $6.90, I would have been out at $6.10 because I never want to risk more than I am willing to make. My producers have accepted this and do the same. They are not worried about selling the low and watching the market rally, they are now more concerned with losing more money than what was willing to be made. I only risk money when at a chart location to do so, and if the risk reward is unclear or not in my favor at the current price, I do nothing.

The problem with options is, without knowledge you can be right the market but wrong the option strategy used and lose money, and with option knowledge you can be wrong the market and still make money using the right strategy. Most people enter options positions not fully understanding the possibilities that can occur if the "what if" or unimaginable happens. That is why services that used the strategy of selling 2 outright calls to buy 1 at the money put, and got killed the last 2 years with record high prices being posted. Instead of making more money like my producers both bulls and bears did, they got killed and some were forced out taking big losses not being able to control margin requirements. We always have a maximum amount of margin requirement with our strategy (except we can sell outright calls when in the bin to cash sale) and all made windfall profits and participated in the rally, being protected the whole time. Having some protection allows you to be unemotional when the market does rally, and the mindset of getting most but not all of any rally allows you to never sell away all the upside no matter how high we go. 

Bottom line, you want to be self directed in a world where so many are predicting the unpredictable which is a fool's game. Do not be a fool or victim any longer, know what you are doing and why, assume the risk that you want to limit yourself to, not a "one size fits all" made by someone else, and since nobody can possible know where we will be at the end of August, protect some of your risk as you pursue higher prices. Try my service and renew it monthly because it truly helps you, not because you subscribed for a year and in a few months is worthless. Let me have a few contracts of 2013 or 2014 crop to hedge, and compare to whatever else you are doing, within a year I will have all your hedges for one reason, I earned it.

Much of what I wrote is for a new article I will publish online soon to try and "wake up" producers to what is out there. Even if I do not attract new producers, it should help them understand more to what the pitfalls are out there, and how the wrong mindset only takes one time to destroy a lifetime of work, and "bet the farm" is real. Like in life, take nothing for granted.

Price check reference: December 2013 $5.10/$4.80 put spread at $.10 7/8, the $5.50/$5.10 at $.20 ½, $6.30/$6 at $.23 ¾. The $6.50/$7.20 call spread at $.06 ¼. The December 2014 corn $6/$8 call spread at $.34. 

November 2013 soybean buying the $12.80/$12 put spread and selling the $13.60/$14.60 call spread settled at $.15 3/8. November 2014 soybean $13/$15 call spread settled at $.46 ½, and the $14/$16 call spread at $.28 7/8. 

I want to trade the numbers when at the extremes, risking little to see if the chart level holds, and if it does I will be rewarded nicely. I will send my take on the report as soon as possible.

 

Want to know what I think for tomorrow and going forward?
What do you do now if you are unhedged? Take 1 month to follow my service and learn for yourself in real time, it is easy to understand, and gives you complete control to gamble or not gamble upside and down, and completely reflect what you think, not on someone else's GUESSES. Or you can use my services and hedge through a CBOT member firm with your own account. I can execute your orders with a 3 way call to my friend who is a floor broker who fills our orders, and you will hear the bids and offers and can execute then, or place a working order until cancelled. You will also be able to work with me and I will answer all your questions until you understand at least the initial hedge BEFORE you implement it, and I will go at your own pace.

The markets covered daily are Soybeans and Corn.

My numbers usually are sent out before the night session begins. Subscribers especially speculators use them as best suited to their own needs and sometimes that involves the overnight trade.

 

HowardTyllas Daily Numbers & Trade Ideas is designed for hedgers to use for long term and short term hedges, and for speculators to help you plan your trading strategies for the coming day.

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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,  1-702-405-7245

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 promise, 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 7/11/13

Jul 11, 2013

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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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WHEAT: Projected U.S. wheat supplies for 2013/14 are raised slightly this month with lower
beginning stocks more than offset by higher production, both based on the latest survey-based
estimates and forecasts. Beginning stocks are reduced 27 million bushels as indicated by the
June 1 stocks estimate reported in the June 28 Grain Stocks. Production is forecast up 34 million
bushels with lower forecast harvested area from the June 28 Acreage report more than offset by
higher yields. Production is raised 11 million bushels for Hard Red Winter and 30 million bushels
for Soft Red Winter (SRW) wheat. White Winter wheat is forecast down 7 million bushels.

 For durum, a reduction in area is only partly offset by a higher yield with production forecast down 5
million bushels. For other spring wheat, a reduction in area is more than offset by a higher yield
forecast in today's Crop Production report, adding 4 million bushels to this month's production
forecast. July survey-based yield forecasts for durum and other spring wheat are up 1.6 bushels
per acre from last month's trend based projections.


Total U.S. wheat use for 2013/14 is raised 89 million bushels as lower expected domestic use is
more than offset by higher projected exports. Projected feed and residual disappearance is
lowered 10 million bushels with stronger export demand, especially for SRW wheat. Exports are
projected 100 million bushels higher reflecting strong sales, particularly to China. Ending stocks
are projected down 83 million bushels. At 576 million tons, stocks are expected to remain well
above the 60-year low of 306 million in 2007/08. The projected range for the 2013/14 seasonaverage
farm price is raised 20 cents on both ends to $6.45 to $7.75 per bushel. At the $7.20-perbushel
midpoint, this would be down from the record $7.77 per bushel reported for 2012/13.


Global wheat supplies for 2013/14 are lowered 3.5 million tons reflecting lower projected beginning
stocks as world production rises 1.9 million tons. Higher 2012/13 feed use in China accounts for
most of the reduction in beginning stocks with smaller increases in domestic consumption for
Pakistan, Russia, and Iran adding to the decline in 2012/13 global carryout. World production for
2013/14 is raised with increases for Australia, the European Union, and the United States offsetting
a reduction for Kazakhstan. Australia production is raised 1.0 million acres reflecting the latest
government estimates for area and a slightly higher yield outlook as early season conditions have
been especially favorable in the country's southern and eastern growing areas. Production for the
European Union is raised 1.2 million tons, however, the addition of Croatia accounts for most of the
increase. Higher production prospects for Romania, Hungary, United Kingdom, and several

smaller countries outweigh reductions for France, Ireland, and Spain. Production is lowered 0.5
million tons for Kazakhstan with lower planted area reported by the Ministry of Agriculture.
Global wheat consumption for 2013/14 is raised 5.4 million tons mostly reflecting higher expected
feeding in China. Wheat consumption is also raised for India, Pakistan, Iran, and Japan, offsetting
reductions for the European Union and the United States. Global wheat trade is raised with a 5.0-
million-ton increase in China imports. A 0.5-million-ton increase in imports for Iran is offset by the
same size reduction for the European Union. World exports are raised 5.0 million tons with
increases for Australia, the European Union, and the United States. Exports are lowered for India
and Kazakhstan. World ending stocks for 2013/14 are projected 8.9 million tons lower. At 172.4
million tons, stocks would be the lowest since 2008/09, but well above the 128.8 million in 2007/08.

COARSE GRAINS: Projected 2013/14 U.S. feed grain supplies are lowered this month with
reduced beginning stocks for corn and sorghum and lower forecast harvested areas for corn and
sorghum from the Acreage report. Corn beginning stocks for 2013/14 are projected 40 million
bushels lower. Corn production for 2013/14 is lowered 55 million bushels with the lower harvested
area and the projected yield unchanged at 156.5 bushels per acre. Projected production remains
just below 14 billion bushels and would be 858 million above the record in 2009/10. Corn supplies
for 2013/14 are lowered 90 million bushels as a 5-million-bushel increase in imports only partly
offsets the lower beginning stocks and production.

This month's changes to corn use for 2012/13 and 2013/14 largely reflect the lateness of the 2013
crop and expectations for extremely tight supplies later this summer and into early fall. Feed and
residual disappearance for 2012/13 is raised 50 million bushels as early harvest of new-crop corn
is expected to be sharply reduced from last year. A 10-million-bushel increase in projected imports
for 2012/13 also reflects the tight supply situation expected for old-crop corn during the summer
quarter. Imports for 2013/14 are raised because the tight supply situation is expected to continue
into September. Feed and residual use for 2013/14 is lowered 50 million bushels with tighter
beginning stocks and lower production, and also on the lack of early new-crop usage which tends
to boost indicated disappearance during the September-December quarter of the new marketing
year. Projected exports for 2013/14 are lowered 50 million bushels as tight supplies of corn in
early September are expected to limit early season shipments. With lower projected use in
2013/14, ending stocks are raised 10 million bushels and remain just under 2 billion bushels. The
projected 2013/14 season-average farm price for corn is unchanged at $4.40 to $5.20 per bushel.
The 2013/14 other feed grain farm price projections are also unchanged.

Global coarse grain supplies for 2013/14 are projected 3.6 million tons lower with 2.9 million tons of
the decline resulting from the tighter supply situation for corn and sorghum in the United States.
Foreign coarse grain supply and use changes this month are relatively small in the aggregate.
Corn beginning stocks for 2013/14 are lowered for Brazil with higher 2012/13 exports and for
Indonesia with lower 2012/13 production. China corn production for 2013/14 is lowered 1.0 million
tons on lower indicated area. European Union corn production is increased 1.8 million tons when
adjusted for this month's inclusion of Croatia, however, last month's 27-member union is lowered
0.4 million tons. Barley production is raised 0.5 million tons for Canada and 0.2 million tons for
Kazakhstan, both on higher reported area. European Union barley production is raised 0.5 million
tons with the addition of Croatia accounting for less than half the increase.

Global 2013/14 coarse grain trade is mostly unchanged this month with exports down slightly on
the reduction for U.S. corn. Global corn consumption is down 2.6 million tons with half of the
reduction in the United States. Corn consumption is also lowered for Indonesia. Global corn
ending stocks for 2013/14 are projected at 151.0 million tons, down 0.9 million, with reductions for
Brazil and China. World corn stocks are expected to be the highest since 2001/02.

RICE: U.S. all rice supplies in 2013/14 are lowered 10.5 million cwt or 4 percent to 235.6 million
cwt, the lowest since 2000/01, as beginning stocks and production are lowered 1.5 million and 10.0
million, respectively. Conversely, the import forecast is raised 1.0 million cwt to a near-record 23.5
million. Beginning stocks for 2013/14 are lowered 1.5 million cwt as small changes are made to
2012/13 supply and use ? imports are lowered 0.5 million to 21.0 million, and exports are raised
1.0 million to 109.0 million. Rice production in 2013/14 is lowered 5 percent to 179.5 million cwt
this month due entirely to a 5 percent reduction in harvested area as reported in the Acreage report
released on June 28. Harvested area for 2013/14 is dropped 141,000 acres to 2.45 million, down
almost 9 percent from last year, and the lowest since 1987/88.

U.S. all rice total use for 2013/14 is lowered 6.0 million cwt or nearly 3 percent to 207.0 million, the
lowest since 2000/01, as domestic and residual use, and exports are each reduced 3.0 million.
Ending stocks for 2013/14 are projected at 28.6 million cwt, down 4.5 million, or nearly 14 percent
from a month ago, and the lowest since 2003/04.

The 2013/14 long-grain rice U.S. season-average farm price (SAFP) is projected at $14.50 to
$15.50 per cwt, up 60 cents per cwt on each end of the range from last month. The combined
medium- and short-grain SAFP is projected at $15.80 to $16.80 per cwt, unchanged from a month
ago. The 2013/14 all rice SAFP is projected at $14.90 to $15.90 per cwt, up 40 cents per cwt on
each end of the range from last month. Long-grain rice price projection for 2013/14 is raised due
mostly to a decrease in expected supplies. Combined medium- and short-grain rice prices are
expected to remain near last year's level as there will be strong competition from Egypt and
Australia for export markets outside of Northeast Asia.

Global 2013/14 rice production, consumption, trade, and ending stocks are all reduced from last
month. Global production is projected at 478.7 million tons, still a record despite decreases totaling
0.5 million mostly due mainly to reductions for the United States and Vietnam. Global exports in
2013/14 are reduced slightly due mostly to an expected decrease in U.S. and Pakistan, which is
partially offset by an increase for China. Global consumption for 2013/14 is reduced due mostly to
decreases for the United States and Nigeria, which are partially offset by increases for Thailand.
World ending stocks for 2013/14 are projected at 108.0 million tons, down 0.6 million from last
month, but 2.6 million above the previous year. The decline in ending stocks is due mostly to
reductions for the United States, Indonesia, and Vietnam, which is partially offset by increases for
China, Nigeria, and Thailand.

Several significant trade changes are made for 2012/13. Global 2012/13 exports are reduced by
0.6 million tons with most of the decrease occurring for Thailand and Pakistan - down 500,000
and 200,000 tons, respectively. This is partially offset by increases in 2012/13 exports for China,
Argentina, and the United States. Imports for 2012/13 are lowered for Indonesia and the
Philippines.

OILSEEDS: U.S. oilseed production for 2013/14 is projected at 100.9 million tons, up 0.2 million
from last month, with increased soybean production mostly offset by reductions for other oilseeds.
Soybean production is projected at 3.42 billion bushels, up 30 million due to increased harvested
area. Harvested area, estimated at 76.9 million acres in the June 28 Acreage report, is 0.7 million
above the June projection. The soybean yield is projected at 44.5 bushels per acre, unchanged
from last month. Soybean supplies are 30 million bushels above last month's forecast reflecting
the production change. With projections for exports and crush unchanged, 2013/14 soybean
ending stocks are raised 30 million bushels to 295 million. U.S. soybean supply and use
projections for 2012/13 are unchanged.

The 2013/14 U.S. season-average soybean price is forecast at $9.75 to $11.75 per bushel,
unchanged from last month. Product prices are also unchanged, with soybean meal prices
forecast at $290 to $330 per short ton and soybean oil prices forecast at 47 to 51 cents per pound.
Global oilseed production for 2013/14 is projected at 492.9 million tons, up 2.1 million from last
month. Higher forecasts for soybeans, rapeseed, cottonseed, and peanuts are only partly offset by
reductions for sunflowerseed. Global soybean production is projected at 285.9 million tons, up 0.6
million with gains for the United States, China, and Canada only partly offset by reductions for
Argentina and Russia.

Argentina soybean production is reduced due to a lower harvested area
estimate for both 2012/13 and 2013/14. Rapeseed production for Canada is projected at 15 million
tons, up 0.5 million based on increased area consistent with the latest survey results reported by
Statistics Canada. Other changes include increased rapeseed production for China and Russia,
reduced sunflowerseed production for Ukraine, and increased cottonseed production for India.

SUGAR: Projected U.S. sugar supply for fiscal year 2013/14 is decreased 647,000 short tons, raw
value, from last month mainly due to lower imports. Higher sugar production, based on higher area
for harvest of both sugar crops, is partially offset by lower beginning stocks. Reduced imports
under the tariff rate quota and the re-export programs combine with lower imports from Mexico to
reduce total imports by 694,000 tons. Total use for 2013/14 is increased in line with the increase
for the previous year. Ending stocks are lowered 667,000 tons to 16.8 percent of use. For Mexico,
lower beginning stocks and higher use reduce ending stocks to 22 percent of domestic
consumption.

LIVESTOCK, POULTRY, AND DAIRY: The forecast for 2013 red meat and poultry production is
reduced from last month on lower beef, pork and turkey production. Beef production is lowered as
steer and heifer slaughter in the second quarter was lower than expected. The lower secondquarter
slaughter more than offsets higher forecast slaughter in the second half of the year. The
pork production forecast is reduced, largely on a reduction in fourth-quarter slaughter.

USDA's Quarterly Hogs and Pigs report indicated that despite a record number of pigs per litter in March-
May, the pig crop for that period was only fractionally above year-earlier. Turkey production is
lowered as hatchery data points toward sharper declines in second-half production.

The broiler production forecast is unchanged. Egg production is raised on higher table and hatching egg
production. For 2014, the red meat and poultry production forecast is higher based on larger pork
production. Pork production increases are driven primarily by gains in pigs per liter as producers
have indicated intentions to only gradually expand farrowings in the second half of 2013.

Beef and pork exports for 2013 and 2014 are unchanged. The beef import forecast is lowered for
2013 and 2014 due largely to expected tight supplies in Oceania. Pork imports are raised slightly
for 2013 and 2014. Broiler and turkey exports for 2013 are raised on the current strength of trade.
Forecasts for 2014 are unchanged.

The cattle price forecast for 2013 is lowered from last month as prices have weakened recently.
The 2014 price forecast is lowered for the first half of the year. Hog prices are raised as demand
strength carries from 2013 into 2014, but price gains will be limited by higher production. Broiler
prices are higher as strong demand is expected to support prices in 2014. Turkey prices are down
slightly for 2013 while 2014 is unchanged. Egg prices are raised for 2013 on relatively strong
demand.

The 2013 milk production forecast is raised from last month based on growth in milk production to
date. The milk production forecast for 2014 is unchanged from last month. Despite weaker
forecast milk prices, forage supplies and feeding margins will likely continue to support modest
gains in milk production.

The fat-basis import forecast for 2013 is unchanged, but lowered on a skim-solid basis reflecting
slower-than-expected imports of milk protein concentrates. The 2013 fat-basis export forecast is
higher on continued robust exports of cheese. Skim-solid exports for 2013 are higher as nonfat dry
milk (NDM) shipments are expected to remain strong. The United States has gained in export
markets typically served by the European Union which has experienced a slowdown in production.
Export forecasts for 2014 are unchanged.

Fat and skim-solid basis ending stock forecasts for 2013 are raised as stocks of butter and cheese
have remained large. Ending stock forecasts for 2014 are raised as well.
Cheese and butter prices are forecast lower for 2013 on larger supplies. Prices for 2014 are
lowered as the larger carry-in stocks overhang the market. The 2013 NDM price forecast is raised
from last month on strong export demand, but the forecast for 2014 is unchanged. The whey price
forecasts for both 2013 and 2014 are unchanged from last month. The Class III price forecasts are
lowered from last month in line with lower product prices. The Class IV price forecast is
unchanged for 2013 as lower butter prices are largely offset by higher NDM prices. However, the
Class IV price is lowered for 2014, reflecting lower butter prices. The 2013 all milk price is forecast
at $19.50 to $19.80 and the price for 2014 is $18.70 to $19.70 per cwt.

COTTON: The month's U.S. cotton estimates include slightly higher ending stocks in 2012/13 and
2013/14 resulting from a reduction in the current season export estimate, which reflects the recent
pace of shipments. Forecast production for 2013/14 remains at 13.5 million bales, the same as
last month; however, estimates of planted area, harvested area, and average yield have been
updated to reflect recent information. The 2013/14 projections of domestic mill use and exports
are unchanged from last month. The forecast range for the marketing-year average price received
by producers is lowered 3 cents on each end to 70 to 90 cents per pound.

Projections of world cotton stocks are also raised in both 2012/13 and 2013/14 due to a
combination of higher production and lower consumption. For 2012/13, production is raised in
Australia, while consumption is reduced in Pakistan and India, but is raised in Vietnam - these
adjustments reflect recent data revisions. For 2013/14, production is raised in India due to
favorable early season weather conditions, while forecast consumption is lowered in Pakistan and
Russia. The balance sheet for China is unchanged this month and assumes continuation of
current policies regulating the national reserve acquisition and release prices.

 

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

The markets now covered daily are Soybeans and Corn.

My numbers usually are sent at least 12 hours (via your email) in advance of the next day open outcry session. Subscribers use them as best suited to their own needs and sometimes that involves the overnight trade.

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

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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,  1-702-405-7245

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 and Soybeans & Trade Ideas for 7/8/13

Jul 09, 2013

  

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 unhinged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 36 years.

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

This report was sent to subscribers on 7/7/13 2:30 p.m. Chicago time to be used for trading on 7/8/13.

 

December 2013 Corn

After the close recap on 7/8/13: My resistance was 5.00, .02 1/2 from the actual high, and my support was 4.87, .03 (pivot was .02 in open outcry) from the actual low.

November Soybeans

After the close recap on 7/8/13: My resistance was 12.51 1/2, .02 1/2 from the actual high, and my pivot acted as support and was 12.27 3/4, .02 3/4 from the actual low.

All charts and numbers for 7/9/13 have already been sent to subscribers at 5:00 pm.  

December 2013 Corn

 
5.07 ½                      Downtrend Line Resistance
5.00                    
------------5.93 ½     Pivot                                                      
4.87          
4.80          
                                      
5 day chart....      Down from last week same day                                                                 
Daily chart   ...    Down                            
Weekly chart ...  Down                      
Monthly chart ...Down               5.80 is the 200 DMA
ATR 14                                          Max. Oversold 0%  

   

 

For 7/8/13: I continue to say "Bracket line is strong resistance now, and daily numbers support".

In my daily December 2013 corn numbers on Friday my resistance was .03 ½ from the actual high; my support was .04 from the actual low.  

2012 low was $5.11 FG, 2011 low was $5.10 (now resistances), and 2010 it was $4.        

 

November Soybeans 

12.51 ½       
12.35                                                                                  
------------12.27 ¾        Pivot           
12.20 ¾ FG                              
12.10 ¾                        near Bracket Line Support      
                            
5 day chart...         Down from last week same day                                                           
Daily chart   ....    Sideways                  
Weekly chart ...   Sideways                           
Monthly chart ....Up                   12.85 is the 200 DMA
ATR 20 ½                                 Ex. Oversold 1%

 

For 7/8/13: I continue to say "$12.51 ½ resists; gap at $12.20 ¾ supports.  


In my November daily soybean numbers on Friday my pivot acted as resistance and was .00 ¾ from the actual high; my support was .01 ¼ from the actual low.                  

7/8/13:

Grains: Looking at the July contracts rally and comparing prices, will NOT help you in pricing new crops.

Reality could be cruel to those in their own subjective reality. Think what you like but one and one is two, 30% hedged and now what? They "hope" (a terrible word to use when trading or hedging) to sell it for $5.50 now (it settled $4.91 ¼), when they could have gotten $5.70 two weeks ago taking risk off before the report and growing season. What do the services do that said when it was below $5.50 they would not sell for less than $5.50 or they will hold corn to 2014? Did they sell anything above $5.50 when they again had their chance at $5.70? How much have they lost in pursuit of $6?  They lost $.80 to make the last $.30, and what is worse is it's not over. Stress, how much is that worth? Their thinking is more than flawed. If they were a floor trader, they would know that you cannot lose more than you are willing to make if you want to survive let alone prosper. You better learn how to have an advantage, and a way of doing things that put the odds in your favor, or it is only a matter of time before the game is over. This is not 1 team wins the other loses; this is 1 winner for every 99 losers. Did they think we would have crop problems every year now one way or another?

Hedge services are supposed to take risk off the table, not tell you what they think the market will do and GAMBLE as they wait to see if what they think comes to be reality. I have seen these services over the years, and not hedging at $4 might be one thing (not to me, I accept reality and always want to have a hedge on to start) but not hedging above $6 is really a gamble.  It is one thing to have a demand driven market, it is another to get a weather induced shortfall to consume supply.   
 
My number one concern since I started this service 5 years ago was to protect risk of the prices going down, while pursuing higher prices, do it cheaply, and to lock in some sort of income to fall back on.

Hot dry is all the chance bulls have now. When I see Tom Skilling show the maps for the next 7 days and it does show a warm up that is welcomed and green (rain) all over. Anything can happen, but "things do what they until they do not it anymore". Crop looks great and ratings should continue to improve on Monday. 160 BPA is forecasted Friday by 1 analyst, more should follow. That would give us $4 corn if realized. 
 
I welcome a bull market and rally, like my producers I can make windfall earnings and they can make another record profit. But I am in reality, as a trader you must know how to control risk while pursuing profits or you might not be able to keep your membership and it would be turn out the lights to trading. Farmers might see a new wave of people turning out the light on the rental property, but worse, turn over the keys to what was their farm. I am sure the reality will hit them like Ripley's believe it or not. I have been long term bearish since September 2012 and continue to have the same stance. At no time have I been bullish, that would have taken place above $5.95, but I have bought back call spreads cheaply when at supports.    

What do you do from here? I am not going to recommend buying the $5.10/$4.80 put spread here (settled at $.17 ¼) because I did that every time we were near $5.70 the last few months. Many times my producers did at resistances, all the way down to $5.10, and that is where the friendly or bullish stance from $5.10 to where the crop insurance takes over (about $4.80) is seen. The main reason for leaving it at $5.10 was more so a "what if" going into pollination rather than any bullish fundamental. The other reason is the disputed planted acreage and crop losses due to late wet planting conditions. $5.10/$4.50 settled at $.29 ¾. This is another example for why you do things at a resistance to improve the downside cheaply, and something when at supports to improve the upside. It is not because you think we might rally or break in the next week or two, it is for expiration, or as a speculator a long term timeframe trade idea. For that reason my producers were active the last few days buying back call spreads for $.03 or less. That is much better than getting long or staying unhedged and watching the beating, and becoming a victim of the bears. Losing $.03 or $.23 is one thing, losing $.83 is another. If you sit there and say "I cannot believe it", well believe it. Losing $.83 in 3 weeks is unacceptable to me, and the pain might not end here. They are in the same position as when at $5.50 or $6.50 and they did little to nothing, they are still 70% unhedged, and some even buying some upside on top of being unhedged. Members, who threw up their hands and said I have lost so much money in this trade there is no sense getting out now, went broke. I always have said that it makes sense to get out of losing trades and use the remaining money to gamble on a new idea that has a chance to make money. Losing more money in a losing trade is insanity. I have taught and you have learned to have a stop or a known risk, which is risk management and will keep you from the disaster that unhedged producers or bulls are experiencing. Have a nice weekend will not be felt by them tonight. Being hedged is trading away some upside for the gain of protection and locking in income. Unhedged has every penny of the upside and downside and is free to do nothing, but it also gives you no control to secure income, and could be disastrous. Finally, people who buy memberships die like flies within 6 months, what makes a farmer think that they can predict the market or control risk any better?    

$5.10/$4.80 put spread was at $.10 or less when I recommended buying; now it is $.17 ¼ and the odds now favor you continuing to do nothing.  If not for the crop insurance, all would be in trouble if production becomes more than what is already expected. 30% of my producers did take protection down to $4.50 when at a resistance. As you know, all producers are the "captain of the ship" and steers their own course. Every day is a new start. The last 3 years have produced an amazing amount of everything to witness and forced to experience if you are a producer, but it will last a lifetime. It was like you went through the school of hard knocks but more than survived, you had record profits. If you have the feeling you can do better than you did or are doing, start now. If you did what was in your journal, then at least you did not fight with yourself and the possible outcomes were known and should be accepted. If you did not listen and execute what was in your journal, then you have a problem to work on.

As a whole, the worst has done very well so far and should feel good with what they have done, if not then start to make some improvements on executing your ideas. The ones who continued to take advantage of the chart when at support and resistance has fared the best, and the ones who were bullish or bearish but failed to take advantage of the market swings especially having a few times to do something cheaply, are the ones who paid for their bias. The people, who were bullish or bearish but did not allow for enough what if to the downside, are learning their lessons. One producer on Friday told me that the reason he is lifting all his calls mostly for $.02 and some less than $.05, was because years ago when I kept writing to take off call spreads for about $.03 and he did not, it came back to haunt him. If he did he would have made another $80,000 he said. That is a lot of $.03 buy backs for years to come. Live and learn.

When you loosen the screws the wheels can fly off quickly. It is never too late to learn how to tighten the screws. It takes time to have the strength to turn it, and each person has the ability to do so. Do not make it a struggle. If at first you don't succeed..... We all had training wheels on our bikes or something similar; you ARE the only person who can take them off.   
 
December 2014 corn is now at $5.20 ¼ which is $.29 more than the December 2013 crop. The December 2014 corn $6/$8 call spread settled at $.22. When you want to take some profits so you can resell if it rallies, you can roll down the $8 call to the $7 call for $.06 1/8. If you sold the $6/$8 for $.37, and you buy the $7/$8 for $.06, you have $.31 minus commissions for the remaining $6/$7 call spread. The $6/$7 call spread settled at $.15 7/8.

We do not know when the liquidation will stop, or when the farmers will sell more, but when that is over we will correct to the upside and test the gap at $5.11 once again. The chart tells me the closest support is $4.87, and after that $4.67 is next, but the strongest support is seen ... subscribe now! That is why I continue to recommend buying the $6.50/$7.20 now for $.02 if you still have it on, but I would rather roll down puts when only $.02 from full value. I would rather roll down my put for $.05 rather than buy a call spread, because even with a change of weather, I would rather be long from $5.60 than above $6 for the same money, yes I get less upside, but closer to reality at this time. The $6.10/$5.70 put spread settled at $.35 ½. I would roll down my puts and take money off the table and into my pocket.   

Old crops are different markets than the new crop as witnessed on the charts. You would not think they were the same commodity. I was aware of this common fact when I started at the CME and learned that pork bellies had a kind of old/new crop because frozen pork bellies have a time limit and cannot be delivered afterward. That helped in understanding that price is relevant to the contract traded, not what the other months are doing. Without inversions I ALWAYS take my cues from the front month. July contracts are strong and are nearing resistance levels again. They can and will do anything as I have said for months. I rely on my numbers to day trade, you can use them to market if you still have any old crop left, but I would not recommend a position overnight without a known risk strategy.

December corn finished in the basement and is really oversold now (1%), and my support numbers are valid and I am confident the first time down to buy at each of the supports and have a sell stop on each attempt to buy. $5.11 is all to expect now for a rally especially without weather concerns. It is there you can do something to get more protection that will be expensive, but not like what it costs now which is almost prohibitive.

November soybeans have the steep downtrend line for resistance this week, and support is found at the bracket lines of $12.04 and $11.87.

I want to trade without bias and risk $.03 ½ in corn and $.06 in soybeans using a stop to protect any idea.

7/5/13:

Grains: Old crops remain strong compared to the new crops, and the market is like an hour glass, as time goes on and nothing changes, prices are coming down. Market has struggled for a long time to make the transition from current supplies to expected burdensome supplies in corn, and ample soybean stocks if weather continues to permit. Fundamentally both bull and bear will not know if their scenario will become reality for at least 2 months, and both camps should realize that neither has an edge, anything can happen. The more rigid they are in their stance, the more dangerous they become trying to defend losses if prices are going against them. My approach has never changed, take advantage of market swings when at significant chart levels, especially when you have a bias and the market is at a good level to reflect it. That is the time to reflect your thoughts, keeping it cheap. In this way you always have the "what if" taken care of, and will not find yourself emotional. If the market goes your way your position will reflect it, and if the market does the opposite or the unimaginable, your "what if" should have put you in a position to make money being wrong. Services generally commit to one direction or another at a time, so they will be entirely right or wrong.

We could be at $4.50 or $5.50 in the next 2 months, and by harvest $4 or $6+. Since the weather and perceptions is a moving target, producers should plan for either possibility. November soybeans could be $11.40 or $13.30+. The approach I take reflects all possibilities, is flexible, and controls risk at all times.  

I want to trade without bias today and risk $.03 ½ in corn and $.06 in soybeans using a stop to protect any idea.      

 

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