Jul 26, 2014
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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.

Grains Still Under Pressure

Jul 26, 2012

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY 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.   

Low volume trade and continued wild volatility ended in another sharply lower day for soybeans and lower day for corn.  To start the day export sales were pitiful, highlighting weaker demand at higher prices.  Soybean sales were just 7 million bushels and we managed to sell negative 400 thousand bushels of corn.  Speaking of selling, so far this week funds have sold 31,000 contracts of soybeans and 23,000 contracts of corn.

Tomorrow might offer some bullish fodder to spark a late week comeback.  Informa is set to offer up their latest production number and this one is based on their computer models and a poor forecast for August weather.  Informa weighs in again next Friday with their estimate based on farmer survey.  Most likely the numbers tomorrow will be the lower of the two.  The US Dollar and outside markets could start to lend support as well with the DOW up over 200 points and the US Dollar down over 70 points.  However, we didn't seem too impressed with that today.

Options on Beans for People Who Don`t Know Beans About Options: http://www.zaner.com/offers/?page=8&ap=tseifrie

What happened to the extreme bullishness we saw a week ago?  Have things changed so much in the last few days?  I don't believe they have, and I don't believe this is over yet.  However, it is important to note that we are finding very willing sellers at these price levels and once we move past weather concerns and we have the a good look at the new USDA numbers we might be left with a vacuum of fresh bullish news, poor export sales and the thought that maybe no one wants to buy $8.00 corn or $17.00 soybeans.

To be clear, I am not bearish corn and soybeans.  I do believe that it is likely we will see new highs or at least a better test of current highs.  But you might say that I am not as bullish as the $10.00 corn $22.00 soybean crowd.  I can, and do smack bullish about the supply situation with the rest of the raging bulls.  But, at the same time I also have concerns about the other side of the balance sheet that much of the trade has forgotten about - demand.  We certainly do need to price ration demand with a short crop, but this is not 2008 with high inflation and a bubble economy.  The current economic situation is that of living in the aftermath of said bubble or bubbles bursting and I'm just not so sure $10+ corn or $20+ soybeans have a place in it.  And being risk adverse as I am I see prices that if I can lock them in will make me profitable for years to come and I can't help but look for a spot to do just that when I feel the timeing is right.  So maybe that makes me unpoular, but at the end of the day all I care about is doing the best I can for my clients.

Sorry for the rant today ladies and gentleman, but it was coming sooner or later...  Shoot, while I'm at it - Happy B-day Tom G. in ND!

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

With high volatility in a weather 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 $7.70 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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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

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