Hedging Corn and Soybeans

Daily Soybean Numbers & Trade Ideas for 10/19/09

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This report was sent to subscribers on 10/17/09 8:00 p.m. Chicago time to be used for trading on 10/19/09. Everything is done by Howard Tyllas, no program or black box.

 November Soybeans

After the close on 10/16/09: My support was $.03, from the actual low, and my resistance was $.02 1/2 from the actual high.

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November Soybeans Chart




November Soybeans for 10/19/09

Last Tuesday we traded $8.84 1/4 on the low, and 6 days later on Tuesday we posted a high of $10.12 1/4. This $6,400 a contract move to start October is in line with what you see on the chart all year in 2009.

Many reasons this year for the swings in price, aided by the late start to the growing season and a normal frost, when a later than normal frost was needed to optimize yield. Rain delays are partly credited to the support recently. Bottom line: Bracket lines are areas that correspond with news events. Green and orange are when crops look good, red when the crops do not, or are delayed, aided by demand.

In my daily numbers on Friday my resistance was $.02 1/2 from the actual high; my support was $.03 from the actual low. 

Grains: Stop and go harvest is not a disaster, but looks like it is not meeting the needs of fall export commitments, and certainly the strong outside markets is not helping the bears either.

This Monday's weekly crop progress report (after the close) should show a bigger lag in crop progress versus the average, but the way the chart looks after last week's action, the delays have been priced in already. I know my producers are ready to push harvest along whenever weather conditions allow. Looks like what I said a while back, soybeans should be sold and brought to market taking advantage of the high price and inversion, with no incentive of holding for higher prices in the bin like they can do with corn by selling March and collecting the extra $.04 per bushel per month. There is not enough room "on farm" to store the entire crop so a decision must be made on what to bring to market.

I still feel like "big crops get bigger" and last Thursday's export numbers show demand was slipping in corn and wheat, so I want to sell rallies this week at resistance.  I have some short corn on still, but no other position going into the weekend.

Here are 2 "fundamental news" that are worth mentioning to you:

The Soybean and Corn Advisor issued South American production estimates,

pinning soybean production at 125 mmt, up 30% from 08/09 as Argentine crops  

recover from last year’s extreme drought and as beans gain acreage across the

continent. The SCA estimates Brazilian corn production at 53 mmt, up from 50 mmt

last year, and he expects Argentine corn production to total 14.5 mmt,

 up from last year’s 13 mmt crop.

Informa issued its 2010 acreage forecasts. The group expects farmers to

add 3 million acres in corn to reach 89.4 million acres. They expect 76.8 million

soy acres, down 700K acres from this year. Wheat area is expected to

lose 1.7 million acres, totaling 57.4 million acres. They expect a 13% decline

in variable costs for corn and a 4% drop for soybeans.

Read a new Article in Futures Magazine: October 2009 issue

 By: Howard Tyllas Executing a butterfly put spread (in Crude Oil)

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Disclaimer:     No guarantee of any kind is implied or possible where projections of future conditions are attempted. 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.