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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.

March Soybeans Daily numbers & Trade Ideas for 2/15/11

Feb 16, 2011

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This report was sent to subscribers on 2/15/11 2:10 p.m. Chicago time to be used for trading on 2/16/11. Everything is done by Howard Tyllas, no program or black box.

March Soybeans

After the close recap on 2/16/11: My pivot acted as resistance and was 14.06 1/4, .03 from the actual high, and my support was 13.64 1/4, just .00 1/2 from the actual low.

All Results for 2/15/11:

My soybean resistance was .03 from the actual high, my support was .00 ½ from the actual low.

My corn resistance was .02 ¼ from the actual high; my support was .06 ¼ from the actual low.

My nat gas resistance was .010 from the actual high; my support was .029 from the actual low.

My crude oil resistance was .09 from the actual high; my support was .01 from the actual low.

My 30 yr. bond resistance was 5 from the actual high; my support was 10 from the actual low.

My gold resistance was $3.10 from the actual high; my support was $0.70 from the actual low.

My S&P resistance was .50 from the actual high; my support was 5.75 from the actual low.

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14.20                   near Uptrend Line (Resistance now)

--------------14.06 ¼            Pivot

13.92 ½                        

13.78                                  

13.64 ¼          

Trend     

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

Daily chart   ....  Up

Weekly chart ... Up

Monthly chart    Up           $11.39 is the 200 DMA

ATR 25 ¼                           Extremely Oversold 9%

soybeans 2 15 11

I still say "Notice how the uptrend line was perfect support on Friday, and now is pivotal. Daily numbers resist, and daily numbers support. Bears will target $13.60 if below the uptrend line".

March Soybeans for 2/15/11

I said "Bulls remain in control as long as the uptrend line holds which is near $14.14 today". They lost control on Monday. Now the uptrend line acts as resistance and is $14.18 on Tuesday.        

In my daily soybean numbers on Monday; my pivot acted as resistance and was .07 ¾ (only .03 in open outcry) from the actual high; my support was .00 ¾ from the actual low.     

Grains: Spot on corn numbers, and spot on soybean and accurate resistance numbers. My call for $14 soybeans and $7 corn this Friday looks spot on for now, and it looks like the market will be within $.10 from there. I could talk about poor export numbers again today, and USDA baseline numbers (compiled in November) added about 1 million acres to be planted for corn, with corn and soybean total acres planted at 170 million acres (2 million more than 2008), as factors for the downturn.

I will wait for the Agricultural Outlook Forum on 2/24 & 2/25/11 for a better picture of supply/demand and their guess at planted acreage for 2011. Baseline soybean yield forecast was only 43.5, but I would expect more because of the yearly increase in production yield due to better inputs such as seed. March Planting Intention Report will confirm or deny acreage being forecasted now, and if there are less planted acres for soybeans, there will not be too much room for error in production. November soybeans would lead the charge higher, but I am talking in April and much can happen until then. USDA baseline forecasted corn 2011/12 carryover at 1.127 billion bushels which if realized would be very bearish from these price levels.

Soybean chart action is negative and bears will be pressing to test the $13.60 support level in time, corn at $6.74. Corn made a new high and closed lower which is negative near term. The risk to the downside which has always been real and now seems a little closer to the possibility that we could correct before the next upturn in April to new highs (if fundamentals warrant it then).

Overnight grains are in "turnaround Tuesday" mode, and if we can get near resistance I would like to take the sell signal and risk $.04 in corn and $.07 in soybeans using a buy stop to protect. I am not interested in taking the buy signal today, but if soybeans can close above their uptrend line today, I would take the buy signals on Wednesday. Choppy action of up and down days could be the tone leading up to Friday and my projection of $14 March soybeans and $7 corn.

Corn and soybean option spreads are getting more reasonable, but still expensive. Make sure you are comfortable with your position no matter if bullish or bearish, and make sure your position is in sync with what you write in your journal. Buying .... SUBSCRIBE NOW!

New Subscribers:  Keep in mind that these are day trading numbers. They are equally to be used for swing trading and longer term trading time frames on the day I want to enter or exit my position. The charts are to be used for overall trade location looking for areas of price discovery of support and resistance levels. When the market does go to the charts longer term support or resistance levels such as bracket lines or longer term trend lines, I use my numbers on that day to enter or exit my position. The numbers do not tell you what to do, you are in control of that, but they will give you a framework to try and buy or sell at the best price for that day. For me it gives me a strategy and the best way I have found to discover the best price for entering or exiting my trade ideas.

If I have the exact numbers for the actual high and low of the day 12 hours in advance, the question has always been, how do I trade it? That is what I best describe in my numbers explanation. Any intuitiveness or nuances I trade, I would keep a journal to see if it is worthwhile overriding my plan. I rarely go against my explanation

2/14/11:

Grains: Spot on soybean numbers and accurate corn numbers. Corn acted very well and posted a new high for the run and closed strongly. You know exactly what I think about corn and soybeans having spelled it out well this week. Soybean old crop was a burden to the market this week, and it is up to the funds as to what extent the liquidation will be while at record levels. My tilt is this; old crop soybeans will drag down the new crop until the old crop finds support. The spread will continue to narrow maybe another $.20 (it narrowed another $.10 on Friday). New crop corn daily this week became more profitable than soybeans to plant, and with higher corn prices underpins new crop soybeans which will eventually support old crop soybeans. Yes, maybe soybeans will pull back corn, but underlying strength in corn will soften the correction. If that is the case that corn will draw acres away from soybeans, new crop soybeans will fall short of forecasted production and will change their balance table for 2011/12 bullish. That, as well as it needs to compete with high priced cotton should support new crop soybeans. If soybeans lose acres, we could add another $1 to November futures from here.

As far as the outside markets to keep an eye on is the $85 mark in crude oil I talked about before the start of this year, as well as a stronger dollar, not day to day mind you, but week by week or month by month.

I still think corn will be around $7 this Friday when the March options expire. All but a few March call contracts have been rolled to an average of $7.20 April calls, as my producers watch in amazement as corn climbs higher and possibly add another $.20 or $.30 more in profits .... SUBSRCIBE NOW!

What I would need to do is...... SUBSCRIBE  

I am skittish to buy corn at these levels, but I would trade the numbers without bias using a smaller contract size on the buy signals on Monday. I want to trade the numbers and risk $.04 on any trade idea. I really would like to be an aggressive seller if we get near $7.31 this week, $6.60 looks to be good support.

I still think soybeans will be around $14 this Friday; at least I am keeping this in mind. Uptrend line is pivotal on Monday, and if the market gaps lower below that line it will not be good for the bulls. Gap higher could occur with follow through strength from corn, and that would make the uptrend line key support, but I would use a sell stop just below Fridays low at $14.09 ¾ to protect. I want to day trade the numbers without bias on Monday and risk $.07 on any trade idea. As far as the outside markets to keep an eye on is the $85 mark in crude oil I talked about before the start of this year, as well as a stronger dollar, not day to day mind you, but week by week or month by month.

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           May Your Next Trade Be The Best                          

                     Howard Tyllas            

 BT 

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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