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June 2014 Archive for The Grain Report

RSS By: Sean Lusk, AgWeb.com

Market updates from Walsh Trading.

The Grain Report by Tim Hannagan 6/20/2014

Jun 20, 2014

 

THE GRAIN REPORT
by Tim Hannagan
Senior Grain Analyst, Walsh Trading

 

Monday’s crop condition report put corn at 76% good to excellent condition. This is 12% higher than one year ago. Bears in the market are projecting the largest crop in twenty years. Last year this time, we bought long soybeans seven consecutive weeks going into the weekend on adverse weather conditions. This year corn is on the reverse, due to the almost perfect weather conditions. But it is too early to get excited about big crops. Yields are made or loss during the pollination stage we have yet to enter. This is when corn needs two thirds of its growing cycle moisture to reach trend line yields. Should the heat dome in the south west move to the Midwest grain belt and stay for an extended period of time December corn could move back to its old 5.18 highs. But should this split jet stream stay in its same track through pollination, charts suggest December corn will move down to 3.90. 4.38 has been holding a strong support as it was a low from January 12th that started a rally to 5.18. A close under 4.38 sets up a test of 4.20. If 4.38 holds, the next resistance is 4.48 then 4.62. Technically we have now taken away the entire weather premium rally which started January 12th. Continue to trade corn based on the weather and its impact on crop development one week at a time. If they put in our weather premium high early off the cold wet spring, then they will put in the pre-harvest low early as well. We should expect a measurable harvest rally as end users, ethanol producers, feeders and exporters move in to get their share of cash grain that farmers have been holding on to tight for the last two years. Professional users cannot afford again to move into the cash market and pay big premiums as reflected on the Bull Spreads this year.

If you missed my weekly grain webinar from yesterday, you mayView a Recording. I will hold my next weekly grain webinar on Thursday, June 26 at 3:00 PM CST. Register Now. As always, please contact me with any questions or to discuss the market.

Tim Hannagan has more than  37 years of experience in commodity markets and is a nationally recognized expert on the grain markets. His opinions frequently appear in The Wall Street Journal, Barrons, Futures Magazine, Investors Business Daily, and other periodicals as well as international news wire services, online blogs, commodity news services and nationally televised networks.
 
Tim has not only helped his investor clients, but also the media, grain producers and corporate executives wishing to sense, identify and capture the slightest moves in the grain markets. His concise and analytical research reports appear every day.

CONTACT TIM 
Direct: 312-957-8108
Toll-free: 888-391-7894
Email: thannagan@walshtrading.com

Listen to Tim's Daily Agriculture Audio Commentary
Subscribe to Tim's Grain Report and his Weekly Grain Webinar
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.

Grains: Protect Both Sides with a Soy Strangle

Jun 11, 2014

Grains: Protect Both Sides with a Soy Strangle

by Sean Lusk
June 11, 2014

The USDA will be releasing two monthly reports on soybeans in June, with one released Wednesday and the other at month end which is a monster in terms of influence as it shows planted acreage numbers.

Stock and index following funds have made a killing this year buying old crop soybeans and selling new crop beans. The marketing year for beans is September 1. Recent price action in the spot months prior to June saw huge price discrepancies between spot months and forward contracts, most notably the September and November futures. Currently the July ‘14 is the front month contract and it enjoys almost a $2 premium to September and at one point last week, a $2.75 premium to November. Old crop beans are being bid up due to ending stocks at historic lows amid strong demand for both old crop and new crop soybeans from China and other Asian neighbors among others. Talk of old crop rationing is still in the market and funds are notorious for fearing bullish USDA reports.

The Commitment of Traders report the last three months has shown a huge build-up of long positions in beans, although there has been some washout or profit taking the last few weeks. July rolls off the board by month’s end leaving the August contract as the last contract before the new marketing year begins. Once these government reports are out of the way, weather and its effect on the bean crop becomes the primary pricing source for new crop beans, but an all-time low number for ending stocks off the next two government reports could send the August contract trading near the $15.00 handle, similar to what happened to the previous May and July contracts.

The question going forward is will the funds go to the well one more time during the summer growing season and play old crop, new crop, and bid up old crop beans to 15.00 and beyond? Or do significant planted acreage, agreeable growing season weather, and sizable global supply oil oilseeds finally take hold and drive August beans lower.

Those interested in playing be protected on both sides of the market and have positions on both sides of the market. I therefore suggest buying the August Soybean 1320 put and selling the August 1220 put against it while simultaneously buying the August Soybean 1500 call and selling the August Soybeans 1600 call for 15 cents or in cash value, a $750.00 cost. The strategy is called an Iron Condor and if need be here one can adjust the strikes on the trade to achieve a lesser risk. The risk on the trade is the price paid for the spread plus all commissions and fees.

Webinars
Walsh Trading’s Senior Grain analyst Tim Hannagan hosts a free grain webinar each Thursday at 3:00 PM CST. 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. Register now for Tim's weekly grain webinar on Thursday, June 12th.
 
Walsh Assetment Management will hold a Are Managed Futures the Right Investment for You? Webinar on Wednesday, June 11th at 3:30 PM CST. In this Webinar account managers Dan Keegan, Tony Marcucci and Ed Modla will discus the basics of managed futures as an alternative investment with a comparison to traditional investments. They will present definitions of managed products; what they are, how they work, and how they can fit in your portfolio. Register Now for Are Managed Futures the Right Investment for You? webinar on Wednesday, June 11th.
 
If you would like to receive a weekly invitation to our Webinars, please Subscribe and select Webinar Announcements and Recordings. 

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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