Sep 20, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin


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.

March Soybean and Corn Daily Numbers & Trade Ideas

Mar 02, 2012

Daily Numbers & Trade Ideas for 3/1/12

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.

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

This report was sent to subscribers on 2/29/12 3:50 p.m. Chicago time to be used for trading on 3/1/12.

March Soybeans

After the close recap on 3/1/12: My pivot acted as resistance and was 13.13, .04 1/2 from the actual high, and my support was 13.01 1/2, .01 1/2 from the actual low.

March Corn

After the close recap on 3/1/12: My pivot acted as resistance and was 6.57 3/4, .00 1/4 from the actual high, and my support was 6.51 1/4, .01 3/4 (only .00 3/4 in open outcry) from the actual low.

All charts and numbers for 3/2/12 have already been sent to subscribers at 4.40 pm.

March Soybeans


13.38 ½ FG
13.24 ½
--------------13.13 Pivot
13.01 ½
12.91 ½

5 day chart... Up from last week same day
Daily chart .... Sideways
Weekly chart ... Sideways
Monthly chart Up 12.85 ¼ is the 200 DMA
ATR 17 Ex. Overbought 95%


For 3/1/12: I still say "The bracket line is support; daily numbers resists".

In my daily soybean numbers on Wednesday; my resistance was .07 (.05 ¼ in open outcry) from the actual high, my pivot acted as support and was .06 ½ from the actual low.

March Corn

6.76 ¼
6.64 ¼ Key Resistance near the 200 DMA
-----------6.57 ¾ Pivot
6.51 ¼
6.42

5 day chart.... Up from last week same day
Daily chart ...... Sideways
Weekly chart .......Down
Monthly chart .... Sideways 6.63 ½ is the 200 DMA
ATR 12 Ex. Overbought 93%



For 3/1/12: I still say "Low on Monday is support at the new steep uptrend line; January high resists".

In my daily corn numbers on Wednesday; my resistance was .05 ¼ from the actual high; my pivot acted as support and was .01 ¾ from the actual low.


3/1/12: Grains: Add $.01 ¼ to the March corn numbers to get the May numbers, add $.06 ½ to the March soybean numbers to get the May numbers.

Soybeans death march is killing the bears, but the bulls should be prepared if their guns are taken away and now pointed at them, to have a plan for defense. Gap lower open in tonight's market could spell the end to further advances, and if we can rally close enough to the pivot to only risk $.06 using a buy stop above $13.13, I would take the sell signal every time. Let me lose $.06 on this trade idea, if I get stopped out I would feel like a casino owner and will not have a thought about it, because after making a new high for the run and gap lower open and in range to take a sell signal, the odds are in my favor and works well in the long run. Let's face it, I feel it was money well spent; the odds are well in my favor. When the number does not hold and I get stopped out, I do not lose sleep over $.06.

My old subscribers are aware humans who trade and gamble on anything and not knowing where the odds of success are; will let a trade idea get away from them and it turns into a disaster. Not knowing where you are wrong is deadly compared to not knowing when to take a profit. This service has insisted that you form an approach based on your own criteria that fits your personality, be risk sensitive and have a reward that is worth the risk. Do not risk more than a reasonable amount on any trade idea, never be emotional, and have a plan for doing so. Lastly, be able to execute your plan and journal your thoughts and what you did or did not do. Keep it real, by doing so you can get better by improving what you see in writing and you should be able to listen to yourself or you are your own enemy.

Corn performance is clearly been good closing on the high for February, but to me as I have said is just trading in a sideways pattern and will continue to do so through the end of March until more is known about planting intentions and the weather in which to do so. December corn uptrend line comes in at $5.60 today and the downtrend line comes in at $5.73. December corn is about unchanged from where it closed on 12/21/11, which is almost exactly between the high and low that was made since then.

Options have been pumped up on the rally which is common, but today it would not surprise me to see at the money calls down almost exactly what the futures will be down. The "delta" for any at the money call or put with 3 weeks to go is 50%, meaning the option will move 50% of what the underlying futures contract moves.

I still say "I want to keep my bearish bias in soybeans and at resistance in corn today, and day trade the numbers and risk $.04 in corn and $.06 in soybeans using a stop to protect any idea".

2/29/12:

Grains: Spot on grain numbers! Excellent performance by the soybean bulls to grind higher up to my resistance of $13.08, with my next significant resistance being at the gap $.30 higher. A pullback to test the bracket line support is in order, and a further break to $12.80 would be where the bulls will want to defend to continue control. If the bracket line holds, the bulls will have reloaded and will try to overcome $13.08 on its way to the gap at $13.38 ½. It does not matter the fundamental reasons for the day by day price movement, because everything known and unknown result in the last trade price that I say is never wrong.

Bulls looking to get back in should first look to do so at the bracket line at $12.90. Typical bull chart action like this, the market will pause in 2 or 3 days after getting above the bracket line and come back to test it, and if it holds I look for $13.38 ½ FG. Since there are many days of higher highs and higher lows, I can make a case for buying at $12.80, but then I would only look for a retest of $13.08, not $13.38 ½ FG.

Everyone is mostly short April $6.50 (settled $.19) and $6.60 calls ($.14), and if this was the last day the $6.50 call would be worth $.07 ¼, the $6.60 would be worthless. The last day is 3 weeks from this Friday. You want the market to be above $6.50 (May contract) on expiration, because all will make at least $.10 seeing how you only have $6.40 put spreads. If you are bullish you should roll your April calls to May calls if you are going to hold grain (or your spec position) or you believe we can rally from here in the next 3 weeks. If not bullish, keep what you have. Because if they go higher your $6.50 call if the May futures are at $6.69 is still worth only $.19, anything lower is in your pocket, but below $6.40 you lose that $.10 in the bin until $6.50. Above $6.69 you make that $.10 in the bin. Regardless, at some point in time before expiration you will be able to buy back your April call and sell the May call.

Speculators should look at both sides of what April $6.50 calls are. You know how I just showed you if you sold that call and the market settled at $6.69 you would not lose money even though you are wrong the market. You can make money and be wrong, and if you are right you can make $.19 if May is just $.08 lower at $6.49 on expiration for the call to be worthless.

On the other hand if you buy that option for $.19, you would need to be right just to get your money back, and at $6.88 just to make even money of $.19. The reason it is costly to buy is that you pay a premium for the fact that you can only lose what you pay for it and there is no margin. The seller has unlimited risk and margin. I am telling you that you should look at each option no matter in or far out of the money as a futures contract, because it could happen when a "what if" occurs. Being long is one thing, being short is completely different. Look at being short the $6.50 call instead of being short a futures contract. I would only sell a future if I felt in the same timeframe as the call expiration; I was looking for much more downside than $.19. Otherwise instead of selling the future, it was much more in my favor to sell the call. I could be wrong the market and make money, and just a little right to make a lot. Here is the key, I ALWAYS used STOPS. I would use a $.09 stop to make the $.19, so my buy stop is at $.28. If the market went through a resistance level, on my chart that I no longer wanted to be short the market, I would get out. It did not matter if it was $.13 or $.33, the reason for being short was the chart NOT the option, and when the chart is no longer a sell, I want out. If they got to a support I would consider just taking a profit before expiration. I might have started with a $.09 stop, but I never risk more than the option is worth. If it is worth $.05 and I think it will be worthless, I am not going to risk more than $.05 to get it, so I use a $.10 stop. It does not matter that I sold it at $.19; I am always short from the last trade price when I determine the risk for the reward that remains.

I still say "I want to keep my bearish bias in soybeans and at resistance in corn today, and day trade the numbers and risk $.04 in corn and $.06 in soybeans using a stop to protect any idea".

2/28/12:

Grains: Spot on soybean numbers and accurate corn numbers. I said "Soybeans just do not want to break, or go up too quickly, and are on a mission to "jab" above the bracket line at $12.90 to see what is up there". They only pulled back a few cents, and now closing above $12.90 could turn into a death march for the bears, and the bulls are holding the reins. Like I also said before, "it will stop going up when it stops going up". Almost a daily barrage of higher highs and higher lows, but most days closing well off the high showing lack of conviction, but the market also has courage to buy any support on a day trading basis and push to see where the sellers come out.

As you know $12.90 is truly the line that separates what in the recent past has been the war between the bulls and bears and who takes control of direction. Above $13.08 the bears should run from this market, but until then if you are long here, you will earn every penny you make.

Producers always make more money if we rally by morphing and capturing when it is significant, you become bearish the price level, or just happy to lock in the money. Producers who are holding old crop have already locked in $13 to $14 and got long again from $11.20 to $11.60. Since then, soybeans have outperformed our expectations by rallying above the call strike sold almost monthly. They always got the difference between the put spread they were long until the call strike sold, that money is in the bin (speculators use a long futures contract), and they also got premium from the call strike sold each month, to more than pay for the put spread. If you did nothing, you no longer made money above the call strike, you lost in the hedge account, you made equal amount in the bin. When you roll you can start over at a higher strike, or morph the call and trade time for a higher strike price. Real time examples of what you can do follow.

If bullish, you are betting on the upside, and if right you will make money on having an ... Subscribe now!

The $12.90 call is working well and is bullish enough, but if you want to bet on higher prices, this would cost nothing to roll to the May $13.20 call. At some point of time when you think the market is at a place you want to take profits, you would then roll up the put spread to $13.20. Remember, you get to sell April calls and then May calls, so if you need to roll to May and not make much on the April call, you make it on the May call. If you can just add $.20 (let alone $.40 or more) to your bin every 2 months while getting protection for free, that is very profitable to continue to do.

The beauty of my strategy is that it looks to improve income while always having some protection. You can make more or less if bullish or bearish, but getting 70% more than the original hedge of what we can rally, is what my strategy is all about. Other services that are unhedged are no different than betting it all, and they are always happy when we rally, and they usually watch income come and go as seen in my comments with the typical hedge service that still has not sold some of its 2011 crop yet, and some sold 20% when we were at the absolute low of the last 9 months. My service locked in $7+ and had protection all year. You should always be concerned with the downside and protecting what you got, and allow for the "what if" and are in position to always make more if the market can rally no matter the reason or that you are a bull or a bear.

The only time you should gamble on an outcome is when you have a conviction for the trade idea. How much you gamble is the next thing to decide, and reflect that in contracts. My strategy has a known risk, so it is easy to figure the wager. If no conviction just stand aside and do nothing.

I want to keep my bearish bias and day trade the numbers and risk $.04 in corn and $.06 in soybeans using a stop to protect any idea.

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

The 6 markets now covered daily are Soybeans, Corn, Crude oil, S&P, 30 yr TBond and Gold

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.

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

 

Howard Tyllas

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

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

Tel.1-312-573-2699, 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.


 

Log In or Sign Up to comment

COMMENTS

No comments have been posted, be the first one to comment.
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions