Apr 18, 2014
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The Grain Report

RSS By: Sean Lusk, AgWeb.com

This is Tim Hannagan it's Friday, April 11. Our first crop condition report of the year for wheat came out this week and will come out each Monday at 3 PM central time. This report is leaned on heavily by large traders to determine whether the crop is getting better or worse on yields. This first report showed 35% of the crops in the Western wheat states are in good to excellent condition, down 1% from 36% a year ago. A good crop rating is  65%. When this crop went dormant the last crop condition report November 24, 2013 showed 62% in good to excellent condition. The 27 percentage point drop was the largest ever over a winter period and the worst for this time of year in the last 12 years. Two main reasons were the drought and the polar vortex. This winter subzero temperatures were consistent and often and caused a lot of stress and winter kill in the young wheat seedlings lying dormant. Key states to follow are number one wheat producing state Kansas, then Texas, Nebraska, and Colorado. The key to trading now is to follow one weather report at a time one week at a time. The current forecast by WXRISK.com the AG weather site sees rain falling on the eastern side of those major states we just noted. Should this system track farther east over the weekend taking the rain out of the western wheat belt, look for a higher open Sunday night but should the system hold as projected, followed by another rain system, with even more rain called for the following Thursday and Friday we should expect May wheat to break 6.52 support and test 6.44 major support before short covering or profit-taking starts. This first-rain system begins Saturday, Sunday, and Monday and then a second system starting next Thursday and Friday. Although the rain is bearish for wheat, it's brings light support to corn, as  the rain being forecast across the Midwest and the cold temperatures, look to delay fieldwork being done in the Midwest and planting being done in the southern Delta. We don't expect a big corn rally off the forecast but we do expect corn to hold its support at 4.94. Beans of course are planted later so it’s  not as concerned about planting delays at this point but more concerned about the softening demand with Brazil  noting that China has canceled more beans shipments which may be re-purchased by the US to make up for some of our shortfall on ending stocks. Technical’s read like this. May wheat resistance is 6.68 then 680 with support at 6.52 and 6.44. May soybean support is 14.55 then 14.20 with resistance at 15.15. May corn resistance is 5.14 support 4.94 then 4.88.

For those interested I hold a weekly grain webinar each Thursday at 3pm. I cover everything related and pertinent to the grain market in detail. 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.

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Grain Straddle Run by Dan Burke for August 14, 2013

Aug 14, 2013

Grain Straddle Run August 14, 2013

By Dan Burke, Chief Options Strategist for Walsh Trading, Inc.

United States Producer Price Index M/M was released at up 0.0%.  Expectations were for up 0.3%.  The United States Producer Price index Y/Y was up 2.1%.

GRAINS

The December Corn is currently 449-6 last.  The Dec Corn 450 straddle (100 days to expiration) is showing a last value of 46-4.  The implied volatility is off as the market trades upward in a quiet fashion on the day.  It is my opinion that Corn will move lower.

The November Soybeans are trading 1226-2 last.  The Nov Bean 1230 straddle (72 days to expiration) is showing a last trade of 79-6.  The implied volatility is off as prices trade sideways to downward.  I believe the Beans will return to the downside.

The September Wheat is resting at 628-4 last.  The Sept Wheat 630 straddle (9 days to expiration) is showing a last value of 17.  The implied volatility is offered as prices are trading sideways to upward on the morning.  It is my belief that Wheat will see further downside.


Please REGISTER for Tim Hannagan's Weekly Grain Webinar on Aug 15, 2013 2:00 PM CDT. Tim is a Grain Analyst for Walsh Trading and a highly sought after commentator on the grain markets. 



It is my opinion that someone looking for hedge protection may look at the following trades in soybeans for protection. I propose buying the November 2013 Soybean 1100 puts for 6.5 cents, for a cost of $325.00 plus commission and fees.  For near term, I also propose buying September Soybean 1190 puts for  2.0 cents or better , which would cost $100.00 plus commissions and fees.

As for Corn, I’m looking at the December 2013 Corn options. It is my belief that a hedging opportunity exists in buying the Dec 2013 Corn 4.00 puts for 5 cents, or $250 in cash value plus commissions and fees.

For CBOT September 2013 Wheat, I believe the best hedge on your production can be in purchasing downside protection at the 620 strike for 6 cents, or $300 in cash value. Also for further out protection, a purchase of the October 2013 Wheat 600 puts for 3-6 cents per option, or $187.50 in cash value plus commission and fees offers great value..

These option strategies of buying outright puts defines what our risk on the positions entails The risk is the purchase price paid for each option plus commission and fees.  I  take pride in my management in managing your risk by using options.  This takes more attention, but helps keep our clients away from margin concerns.  Our trading analysis of upcoming weather forecasts along with our understading of trend following fund psychology  is a major emphasis for our aforementioned trade recommendations. Walsh Commercial Hedging constantly provides our clients with up to date weather models, support and resistance technical levels, and knowledge of grain market influences.  We believe a well informed trader will be put in the most advantageous positions.

For more market information, Dan can be reached at 1.312.957.8248 or via e-mail at dburke@walshtrading.com.

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.

Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The views and opinions expressed in this letter are those of the author and do not reflect the views of Walsh Trading Inc. or its staff.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Walsh Trading Inc. Copyright © Walsh Trading Inc. 

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support refers to an area on a chart where buy orders may be clustered. Resistance is an area where there may be sell orders.  Fibonacci retracement is named after a 12th century Italian mathematician and based on the theory that prices rise or fall by predictable amounts after reaching a high or low. 

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