November Soybeans

After the close recap on 7/14/10: My resistance was 9.69 1/4, .02 1/4 from the actual high, and my pivot acted as support and was 9.50 1/4, .02 1/2 from the actual low

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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.

November Soybeans Daily Numbers & Trade Ideas for 7/14/10

Jul 14, 2010



This report was sent to subscribers on 7/13/10 2:50 p.m. Chicago time to be used for trading on 7/14/10. Everything is done by Howard Tyllas, no program or black box.

November Soybeans

After the close recap on 7/14/10: My resistance was 9.69 1/4, .02 1/4 from the actual high, and my pivot acted as support and was 9.50 1/4, .02 1/2 from the actual low

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69 1/4                               Resistance

9.60 3/4                        

-------------9.50 1/4         Pivot & Bracket Line

9.39 3/4                    

                   

        Use the same numbers as used on 7/13/10

Trend                      

5 day chart...      Up from last week same day                                                

Daily chart   .... Sideways                   

Weekly chart ...Sideways           

Monthly chart   Sideways         $9.52 is the 200 DMA

ATR 18 1/2        Overbought 88%  



I said "Sideways chart this year trading all but a few weeks between $9 and $9.50".    

I said "Market closed on the downtrend line which becomes pivotal because of that. We are at a resistance level with the next being the high of April at $9.87".

Higher highs and higher lows is chart friendly.          

November Soybeans for 7/14/10:

 In my daily numbers on Tuesday; my resistance was .01 3/4 from the actual high; my pivot acted as support and was .03 3/4 from the actual low. 

 Patience to wait for good locations to enter a trade will reward you by providing minimum loss if wrong, and more profit if right. You might miss trades (some glad you did) and not be as active, but this type of trading makes you a casino, not a player.

 Grains: Spot on numbers. The Russian President announced the severity of the Russian drought and its potentially catastrophic impact on Soviet grain production and farm income. That was all that was needed to send sellers to the sidelines and end users probably covering some needs. This is my guess, because while it was happening (wheat being so strong) I did not know the statements were made. I was thinking the traders were spreading the markets with corn suffering most of the selling, with soybeans and wheat seeing the buying side.

Soybean chart is grinding higher, and closing just above the bracket and downtrend line as well as the 200 day ma is encouraging. For now, I would only day trade this market using the numbers and not risk more than $.06 on any trade idea.  Corn did indeed correct down to the downtrend line which the bears failed to recapture. This line acted as good support and will continue to do so. I consider this line as a perfect place to buy if I was waiting for a pull back to do so. I still do not want to take the buy signals at this level, and at this time would not consider buying until $3.70. I would rather sell at the resistance numbers (including pivot) risking $.05 using a buy stop to protect. My bias is bearish at these levels, but I feel it is a flip of the coin at best. I would rather day trade the grains then take a position overnight, but I could see bears risking a few cents overnight to try to hold their shorts looking for $.15 more if right.

November Soybeans for 7/13/10:

Grains: Spot on corn numbers and spot on soybean resistance, but soybean support were accurate. Soybeans posted a higher high and higher low which is friendly, but closing lower was not. They did not manage to stay above the bracket line, let alone above the downtrend line. The fact they could not stay above the 200 day moving average is also negative. This chart looks like it is turning over, but it only takes a close above the resistances I just outlined to reverse that condition and regain the bull mode. It is trading just above the pivot as I write which makes me wait until it gets closer to resistance to take a sell, or be aggressive and sell if under the pivot, and not risk more than $.06 on either trade idea. If the market breaks down I would look to buy at a better chart location before trying to go long. Monday's 2pm crop progress report showed a 1% reduction from the good to excellent rating and was expected.

Corn failed to poke its head above Friday's high so the market technically was a sell and not risking much with a tight buy stop just above Friday's high. Monday's report showing corn progress actually improved 2% was bearish and I do not think was expected. That is probably why corn is down $.03 as I write. Looking at the chart it looks like it is turning over. I continue to want to take the sell signals and only use the support numbers as a place to take profits but not take the buy signal. I have no problem getting long somewhere below $3.70 but not near $4. The chart had a great rally and is falling just short of the average "$.60 summer rally" as well as falling short of the 200 day moving average, and trying to test February's high just $.15 above there. I would rather risk $.04 on a sell signal and not even try to get long from here.  

What am I looking at for a fundamental bias today? Bulls will be searching for a rouge weatherman but in the meantime they did see beneficial rains over the weekend. If we were not looking at ideal weather the next 2 weeks I would say we could rally from here, I just do not see it. Too much rain even though it could be disaster on your farm, means huge crops in other areas. This is the time when places like IA, NE, & the Dakotas, are still pollinating, but the crop as a whole is at 38% well ahead of the 5 year average of 26% and last year at only 15%. I am looking for rainfall (or lack of it) in the next 2 weeks because with the hot time of the year and downpours (or sprinkler like) of an inch or 2 will equate to an increase in crop yield. I am not saying that we have seen the highs this year, but I am saying that a pullback to test a support is in order, and the bulls need help from a weather forecast at this time to carry the market higher from here.        

Results for 7/12/10 were:

Soybeans: My resistance was .01 from the actual high; my support was 04 3/4 from the actual low.

Corn:    My resistance was .00 3/4 from the actual high; my support was .02 1/2 from the actual low. 

Crude Oil: My resistance was .18 from the actual high; my support was .12 from the actual low.

S&P:    My resistance was 2.25 from the actual high; my support was 2.25 from the actual low. 

Gold:     My resistance was 1.60 from the actual high; my support was 5.80 from the actual low. 

Euro:    My resistance was .01 from the actual high; my support was .02 from the actual low. 

Bonds: My resistance was 15 from the actual high; my support was 10 from the actual low. 

Nat. Gas: My resistance was .024 from the actual high; my support was .013 from the actual low.   

Cattle:  My resistance was .02 from the actual high; my support was .05 from the actual low. 

November Soybeans for 7/12/10:

Grains: Spot on grain resistance and accurate support numbers. Report shows 9/11 corn stocks are forecasted as the lowest since 9/07, and 6/11 wheat stocks will be at their highest since 1987. Huge decline in 10/11 soy oil stocks due to USDA increasing 600 million pounds in domestic use versus June. Corn yields need to be average to maintain adequate supply, while soybeans can lose 1.4 bushels per acre (BPA) and still have stocks of 250 million bushels.

The biggest factor as I have been saying is the weather which equates to yield. July to Final corn yields has swung 14 BPA in either direction. Last year the USDA underestimated final corn yield by 11 BPA on their July forecast while in 1993 they overestimated the final by 17 BPA. Until we are sure yield this year will be 165 or better, the market should see buyers at support levels. Soybeans usually can see 2 to 3 BPA swings from July to Final.

I want you to keep in mind that these are estimates and they are not meant to be relied on more than that. Will July weather be better than June was? Weather right now is ideal, so if the market can rally from here it has other things on its mind than near term weather. We are entering the hottest time of the year right now, so it will be interesting to see what happens.   

(No matter the market you trade this applies) With all that said and done, where do we go from here? The answer only Mother Nature can know, and as always I look to the charts and numbers, looking for locations to take small risk for nice rewards no matter day trades or longer term position trades. The corn market has been extremely overbought for days which mean the buying has been intense, and soybeans joined that condition on Friday. I cannot buy at resistance levels in that condition, I would rather buy a pullback. Which leaves me the sell side at resistance levels not risking more than $.04 in corn or $.06 in soybeans on any given trade idea. Grain markets tend to trade well technically in the summer because the fundamentals are like a moving target and cannot be pinned down at any time now.  

The only thing I can rely on a day to day basis is what has been support and resistance in the past and what is more likely to continue to do so. What helps in an overall trade location are bracket lines and trend lines. I do not care why these factors work so well in price discovery as long as it continues to do so. The same charts have been around long before I was born, and will be here long after I am gone. Not only should price levels bring out the end users and producers, at those levels buyers and sellers should also be seen because it is recorded on the daily chart as locations to do so. When chartists look at these levels we expect them to continue, and not only do the end users want to buy at a level, the chart tells the speculator to do the same thing and adds to the support. Not only where the farmers would like to sell is at a price based upon the past, so do chartists. The more people who look at price history and use them in the present, the stronger the support or resistance becomes. It like feeds on itself. Basically, even if you are a pure fundamentalist, you still would want to confer with a chart before buying or selling. The alternative to not looking at a chart for some kind of price discovery, would be no different than to say you will swing at the next pitch even though it could be impossible to hit. I cannot believe that even asset allocation funds with a buy only program, would not use a chart technician in the aid of the best price possible that day or in the future.   

November Soybeans for 7/9/10:

 In my daily numbers on Thursday; my resistance was .03 1/2 from the actual high; my support was .02 3/4 from the actual low.

Patience to wait for good locations to enter a trade will reward you by providing minimum loss if wrong, and more profit if right. You might miss trades (some glad you did) and not be as active, but this type of trading makes you a casino, not a player.  

Grains: Spot on grain numbers! I will be sending out the report by 9am. Unusual PRC old crop soybean purchases at this time of the year gives you a sense that they are stockpiling or concerned about US crop prospects this year. These markets are rallying in spite of the ideal weather right now, and trying to figure out the clear fundamental picture is a task beyond hitting the bull's eye, I defy anyone to just "hit the board". Yes, we go with the numbers that are out there for all to see, but the reality of estimating acreage planted and actual yield is difficult this year, and is an educated guess at best including the guesstimates from the USDA.

The momentum in the market this week could push the markets to test the next level of resistance if the report is helpful in that pursuit, but could also lend support if the report is bearish, and could see good buying at support levels. I have laid out normal summer rally parameters but I keep in mind that the summer has just begun.   

Back to the charts. You can see that December corn is in eyeshot from the high of May that fell short by .01 1/2 cents on Thursday. After that we have some resistance at $subscribe now$. The close on the Final Jan.12th report was limit down at $4.17 1/2, and so if I can see a rally near there, I would not hesitate to take a sell and risk $.06 to make $.20 (or more) on a corrective break. This market as outlined before has no fundamental teeth for me and so this could be a dog food chart and I would approach and trade it the same way as if any other commodity with uncertain fundamentals. I want to pick my spots and swing at the good pitches (trades) that provide a minimum risk if the number does not hold, and reward nicely when it does.

Soybeans ran out of steam at the downtrend line, which I would have expected to hold seeing as the amount they rallied warranted profit taking at that level a day before the report. The bulls will need the energy to hurdle that line and make a run for the high of April at $9.87.  On January 12th the market finished .25 1/4 lower at $9.65. I do not know what the fundamentals will be going forward, but what I do know is these are the resistances for soybeans and corn. We know the support levels but we are not near them now, and if the report is bearish we will see what is and holds the market from further losses.

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           May Your Next Trade Be The Best                          

                     Howard Tyllas            

  

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.

 

 

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