Aug 22, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin


The Ted Spread

RSS By: Ted Seifried, AgWeb.com

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.

Early Thoughts on Friday's USDA Report / Trade Guesses

May 07, 2013

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.   

This is a big report because not only are we going to be looking closely at the USDA's numbers for 2012/2013 but we will be very interested to see what they say about 2013/2014 for the first time.  In the grain complex the biggest surprise is usually the market driver on these reports.  Meaning, if we are way off on one of the numbers that commodity will likely be the leader for the day.  If there is no big surprise or all the numbers are big surprises then corn seems to be in the drivers seat of the grain complex.  However, at this time of year it is not uncommon to have grains move different directions as the acreage story unfolds.  

The biggest numbers in this report will be ending stocks numbers for 2012/2013 and 2013/2014.  The average trade estimates are as follows:  

2012/2013  

Corn - 749 million bushels

Wheat - 733 million bushels

Soybeans - 123 million bushels  

2013/2014  

Corn - 1.993 billion bushels

Wheat - 658 million bushels

Soybeans - 236 million bushels   

CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=tseifrie

There are a lot of moving parts on this report so it is very difficult to tell if the trade will be paying more attention to 2012/2013 or 2013/2014.  It really is a situation of two sharply contrasting fundamental make ups.  2012/2013 was a major drought year resulting in low ending stocks and tight balance sheets (also record high prices in corn and beans last summer).  2013/2014 is expected to be a huge crop as long as we get it planted and have a good growing season.  Here again the biggest surprise may take the lead.  

At first glance I wonder if the USDA is really going to show us almost a 2 billion bushel carry over in new crop corn.  They most likely can not change acreage numbers this early in the game, but them might choose to bump up the demand numbers to even things out.  The same concept might be in play for the soybeans.  If the USDA can not increase soybean acreage at this time they might want to tone down demand numbers to even things out.

Sign up for our Morning Ag Comments: http://www.zaner.com/offers/?page=17

I will get into more detail on Thursday.  If you are looking for ideas or want to talk strategy feel free to give me a call or shoot me an email, you will find my contact info below.

December Corn Daily chart:

November Soybeans Daily chart:

December Wheat 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 corn near $7.00 and soybeans near $14.00. 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. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

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=tseifrie

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

Log In or Sign Up to comment

COMMENTS

No comments have been posted, be the first one to comment.
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions