The Ted Spread
Ted is the Chief Market Strategist and Vice President in charge of the Zaner Ag Hedge Group and specializes in agricultural hedging employing various strategies using futures, futures spreads, outright options and option combinations. He believes it is paramount to be able to use different strategies to adapt to market conditions. Ted works with large to mid size grain and livestock producers and end users in North, Central and South America.
Are Grains Setting Up for a Bounce?
Sep 25, 2012
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Are corn, wheat and soybeans setting up for a technical bounce? There has certainly been a lot of energy spent pushing grains off highs but it seems that pressure could be waning for the time being. Overall the grains may very well still have some more downside potential, but the last 5 trade sessions are starting to hint that there may be some opportunity to sell some higher prices.
In the last 5 trading sessions we have tried to push corn down below 739 and soybeans below 1600 with some success, however every time support is broken grains come rallying back to close over the key numbers. After trying and failing to do this 4 out of the last 5 sessions it may be time for the bears to give up the gun for now and let the bulls take the wheel and give it a shot. If there is a bounce from here it is most likely to be sold. Major resistance for corn comes in 30 cents higher at 773 and for soybeans major resistance lies 40 cents higher at 1655. If we truly are in a fledgling bear market the bounce will not quite hit upside objectives as sellers will jump the gun to make sure they get good pricing.
CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=tseifrie
Overall it is very possible that with early harvest this year harvest lows could also come early. However, with harvest numbers widely coming in better then expected and demand destruction (according to the USDA) being more aggressive then anticipated it is certainly conceivable that grains could continue to slide through the November USDA report. What happens in the winter months will be mostly determined by weather. This year we will be watching weather straight through next growing season as South American weather will be very important in price determination and our own winter precipitation will be needed to improve drought depleted sub soil moisture levels. Good precip in the states and a good growing season, possibly El Nino, in South America could put a major damper on our post harvest rally.
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With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.
December Corn Daily chart:
November Soybeans Daily chart:
All this means that speculators should be looking for opportunities and producers need to look to lock up some prices while we have new crop corn above $7.00 and new crop soybeans above $16.00. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent.
Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs.
Ted Seifried (312) 277-0113 or firstname.lastname@example.org
Please check out my Blog at: http://tedseifriedfutures.com/
Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=Seifried
Futures, options and forex trading is speculative in nature and involves substantial risk of loss. This commentary should be conveyed as a solicitation for entry into derivitives transactions. All known news and events have already been factored into the price of the underlying commodities discussed. The limited risk characteristic of options refers to long options only; and refers to the amount of the loss, which is defined as premium paid on the option(s) plus commissions.
FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STRIKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR EVEN MOVE IN THE OPPOSITE DIRECTION