Sep 19, 2014
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The Grain Report

RSS By: Sean Lusk, AgWeb.com

Market updates from Walsh Trading.

Grain Outlook: Spread the Beans

Sep 11, 2014

Grain Outlook: Spread the Beans
by Sean Lusk
September 10, 2014

Reports from the Southern Delta as they relate to bean development have been ideal at best with many farms reporting over 90 plus yields.

Many farmers in those regions have been harvesting rapidly to take advantage of old crop premiums while they are available due to old crop tightness. Old crop supplies are tight with reports of crushers paying over $4.00 over November futures to fulfill needs. With record crush and exports scheduled for October and November, it may take that long to refill bean and meal pipelines. This may lead to a pause in the bear market in the next few weeks and tighten what is now considered old crop spreads.


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Seasonally crop conditions decline late summer due to the harsh weather August brings, but that wasn’t the case this year. Good to excellent the last week of July was at 71 percent which was surprisingly one pint worse than the September 8 condition report. In addition, early yield reports in southern states have been phenomenal, lending thought of much higher future yields in future USDA reports. Some crushers have noted that it will be the end of October before enough beans are on hand to meet domestic meal demand and record soybean exports. They mention it will be extremely difficult to refill empty pipelines as they transition from old crop to new crop supply. The trade is aware the export commitment for both soybeans and soy meal are record large for this early in the season. This leads to the possibility that importers have front loaded their expected needs. Because excessive rainfall and a possibility of an early freeze could still result in a downgrade of crop conditions in coming weeks, I propose the following trade.

Spread Trade
Traders should look to buy the November 2014 and sell the May 2015 futures spread at negative 21 cents or better. I’m looking to a move up to at least up to the higher trend line at negative 13 cents. A close under the down trend line at negative 25 cents or so and I would exit. Risk is light here at just 5 cents on the spread, but be careful on report days. Those more conservative should trade mini contracts on this spread, at one-fifth the regular contract size.

Webinar
Walsh Trading’s Senior Grain analyst Tim Hannagan hosts a free grain webinar each Thursday at 3:00 pm central time. Tim has been ranked the #1 grain analyst in the United States per Reuters and Bloomberg for his most accurate price predictions for soybeans and corn in the years 2011 and 2012. 
Registration is free and if you cannot attend live, a recording will be sent to your email upon signup. If you would like to receive a weekly invitation to our Webinars, please Subscribe and select Webinar Announcements and Recordings. Register now for Tim's weekly grain webinar on Thursday, September 11th.

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING.  THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT.  WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS. 
 
Sean Lusk  is a registered commodity broker and Co-Director of the Commercial Hedging Division of Walsh Trading in Chicago. Sean began in the business as a runner on the trading floor during summer breaks from college in 1993. Upon his graduation from Southern Illinois University at Carbondale in 1996, Sean began his career on the trading floor of the Chicago Mercantile Exchange (CME). Overseeing billions of dollars of transactions working as a clerk in the Eurodollar pit, Sean took the next step and became a floor broker and member of the CME in 2003. He handled customer orders for banks and investment houses from all over the world from inside the Libor pit at the CME.

Now, at Walsh Trading, Sean utilizes his experience in the marketplace and his professional client service skills to aid and assist customers in their trading endeavors.

Sean writes daily and weekly commentaries focusing on Precious Metals and Agricultural Markets along with related market activity. He has been quoted in various media outlets discussing futures markets. These include, Futures Magazine, Reuters, Forbes, Kitco, Nikkei Press and CCTV.com.

CONTACT SEAN
Direct: 312.957.8103
Toll-free: 888.391.7894
Email: slusk@walshtrading.com

Listen to Sean's Daily Gold and Precious Metals Audio
Subscribe to Sean's The Gold Report 

Russia Eager to Sell Wheat: Play It with a Put

Aug 13, 2014

Wheat rallied last week due to fears that the Russian/Ukraine crisis could slow or halt exports.

However both nations are in need of foreign reserves and the short covering rally was short lived. World production estimates continue to climb and US prices are well above foreign competitors. Therefore, without supply disruptions from the Russian/Ukraine region, there seems to be little reason why Chicago wheat futures wouldn’t trade lower in my opinion.

Russia’s decision to ban imports led some to speculate whether or not Russia would also ban wheat exports in an effort to maintain adequate food supplies. However it became clear by last weekend that Russia would need the foreign exchange generated by wheat sales and not further disrupt trade with importing nations that have nothing to do with the sanctions.

Harvest in Europe is well under way and yield estimates for Russia have been rising. Private forecast estimates have the Russian wheat crop coming in at 56 million tones with supply projected at 61.2 million tones, the largest since 2011. It is my opinion that Russia seems eager to sell wheat early this year by discounting prices, and sending excess supply into exports to generate foreign exchange.  The Ukraine is also in desperate need of foreign exchange and as long as Russia does not blockade their ports to destroy shipping infrastructure, it is expected that they will export as much as possible going forward. It is my contention then that supply will outpace demand, and that foreign ports mainly in the Ukraine and Russia will continue to discount milling wheat cheaper laving the U.S. as a third or fourth port for global exports. 

 

SeanAug13.JPG

 

The Trade

Therefore I propose the following trade. To define risk, look at buying the December wheat 530 put for 13 cents, or in cash value $650.00. The risk on the trade is the price paid for the put, plus all commissions and fees.  A close below the trend line on the chart about 5.38 should indicate lower prices going forward in my opinion. 

Webinar

For those interested in grains, Walsh Trading’s Senior Grain analyst Tim Hannagan hosts a free grain webinar each Thursday at 3:00 p.m. central time. Tim has been ranked the #1 grain analyst in the United States per Reuters and Bloomberg for his most accurate price predictions for soybeans and corn in the years 2011 and 2012. Link for next week’s webinar is below. If you cannot attend live, a recording will be sent to your email upon signup.  

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING.  THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT.  WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS. 

Tim Hannagan's Weekly Grain Report for August 1, 2014

Aug 01, 2014

 This is Tim Hannagan its Friday August 1. Soybeans began the week with its 3 PM Monday crop condition report. Condition came in and 71% good to excellent condition, down 2% from the week prior and the lowest number of the year. With 38% of the crop having pods being set, we can safely say were in the middle of the key yield development time. Current weather forecasters are calling for below normal temperatures to continue as we head deep into the month of August. This past July was the coolest since 1895 setting up August to possibly break the record. Surely we will have talk of an early frost by month end but early on traders will be questioning the cold weather and its ability to produce yields. Crop tours will be anxiously awaited for and watched. Tour results could show fewer pods and smaller beans in the comments. Many believe that the excessive coolness weather will have no effect on the bean crop. That was not the case the last several years as cool autumns have cut yields.  Last Thursday’s Weekly Export Sales Report a demand side report showed massive exports for new crop delivery being sold primarily to China.

 

 We Can Validate the Impact of Demand on the Bean Market once crop size is known, so  don’t put a lot of weight on demand size fundamentals just yet. In the meantime. The last four years this time of year or in the harvest, the market was projecting over 400 million bushel soybean ending stocks. The reality was that ending stocks finished less than 200 million bushels. Technicians are excited about the Beans. We have a double bottom that potentially signals very strong points of support and we haven't visited the double bottom point at 10.56 since Monday last week. Support on November new crop beans is 10.55, a close under and 9.50 is next. A close over our 11.20 resistance sets up 11.50 as next resistance.

For those interested I hold a weekly grain webinar each Thursday at 3pm. It is free for anyone who wants to sign up and link for sign up is below. If you cannot attend live a recording will be sent to your email upon signup.

 

Sign Up Now

 

Senior Livestock Analyst Mike Bauer and Senior Technical Analyst Ben DiCostanzo will host their Livestock Oultook webinar thei Wednesday August 6, 2014 at 3:00 PM CDT. If you cannot attend a live, a recording will be sent to your email upon signup.

 

Sign Up Now

 

Tim Hannagan

Grain Analyst

Walsh Trading

thannagan@walshtrading.com

888 - 391 - 7894

312 - 957 - 8108

 

Join My Mailing List

 

Walsh Trading, Inc. is registered as an Independent Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. ("WTI") shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

Tim Hannagan's Weekly Grain Report for July 11, 2014

Jul 11, 2014

 Hi this is Tim Hannagan it's Friday, July 11.   November soybeans made a new low today of 10.85 prior to today’s 11 a.m. USDA crop report which is almost a $1.60 off the June high. On the demand side our last weekly export sales report showed most of our demand is going for new crop delivery after September 1. So demand is not a driving force here. Important to note that after monthly crop report by the USDA we often see profit-taking profits. Should the shorts that are profitable in November contracts in soybeans decide to take their fair share we could see a move all the way back to 11.45. But should we continue here midmonth to price in weather and its impact on yields then we should expect that a close below 10.90 will set up the next moved to support of 10.50.  December corn is sitting right on its long-term trend line that goes all the way back to November of 3.90. A close under and 3.65 is next. But should this hold funds look to take profits for the month-end we could expect to move back to 4.10 possibly 4.22. As per wheat we were at 5.60 last January and funds were short a near record 120 thousand contracts leading to a short covering rally back to 7.40. As we entered last week we hit 5.60 with funds only short 61,000 contracts leaving over 40,000 contracts to come to the market. We expect the European nations loaded with high protein milling wheat to continue to under bid the U.S. making us a third or fourth port of origin for milling wheat. Our wheat low is not in yet.

For those interested I hold a weekly grain webinar each Thursday at 3pm. It is free for anyone who wants to sign up and link for sign up is below. If you cannot attend live a recording will be sent to your email upon signup.

Sign Up Now

 

Tim Hannagan

 Grain Analyst

  Walsh Trading

  thannagan@walshtrading.com

  888 - 391 - 7894

  312 - 957 - 8108

Join My Mailing List


Walsh Trading, Inc. is registered as an Independent Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. ("WTI") shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

 

 

Get Ready for Friday's USDA Report

Jul 10, 2014

Corn Traders: Get Ready for Friday's USDA Report

by Sean Lusk
July 9, 2014
 
The June quarterly stocks and acreage report released Monday June 30 didn’t give traders what they were expecting. Traders had thought that the extremely wet spring and late planting would lead to less corn and more soybeans being planted.

USDA News
The report basically showed ample acreage for both. The July 7 crop condition report had all key producers of corn and soybeans come in equal to or over the national average. The crop condition number exceeds the 10-year average. Needless to say, planted acreage, crop condition and weather all were and continue to be bearish for pricing. We have started off this week with lower prices on corn and soybeans on a cool wet 6 to 10 day forecast; however we should expect a buying opportunity with ample short covering with new buyers prior to Friday’s monthly USDA crop report.

Look for a pre-report rally as a good selling opportunity for corn, if weather cooperates. Should December continue to close under 4.20 it sets up 3.90 as a next major support, with 3.78 to follow.

Yield estimates for new crop corn remain conservative in my view until more is known about pollination in to mid-July. I see some analysts forecasting 170 bushels per acre. A yield this high would add a surprising 311 million bushels to last month’s production forecast. It is my belief that USDA should cut feed/residual use while increasing yield in months ahead, how much is the question? Weather and its effect will be the obvious determinant, as grain prices are 90 percent effected by weather at this time of year.

Two Trades
I propose two trades here, one futures and one options. For conservative traders, look at buying the September Corn 380 put for 8 cents or better. The cost is $400.00 which is the risk on the trade plus all commissions and fees. For more risk I propose selling futures on a pre-report or report day rally at or near 4.20 basis December. Risk a close over 4.38 if you get filled risking approximately $1,000.00 on the trade plus all commissions and fees. If weather continues to cooperate, rallies should be sold in my opinion.

Webinar
Walsh Trading’s Senior Grain analyst Tim Hannagan hosts a free grain webinar each Thursday at 3:00 pm central time. Tim has been ranked the #1 grain analyst in the United States per Reuters and Bloomberg for his most accurate price predictions for soybeans and corn in the years 2011 and 2012.
Registration is free and if you cannot attend live, a recording will be sent to your email upon signup. If you would like to receive a weekly invitation to our Webinars, please Subscribe and select Webinar Announcements and Recordings. Register now for Tim's weekly grain webinar on Thursday, July 10th.

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING.  THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT.  WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.

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