Sep 21, 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.

Is the Party Over for Soybeans?

Dec 26, 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.        

Soybeans were under pressure after the holiday.  March soybeans were down 17 1/2 cents and posted the lowest close since December 3rd, narrowly missing the lowest close since November 21st.  Are soybeans ready to break out of this trade range?  

South American weather has been and will continue to be a major driving factor for soybeans.  Brazil, for the most part looks pretty good but recently concerns have grown over hot and dry conditions in Argentina.  Over the last few days more rain has been added into the forecast for Argentina, but hot and dry conditions continue to linger in some of the longer term forecast models.  The added precip weighed on soybean prices today, but if Argentina were to miss out on the advertised rain or if they return to an extended hot and dry period after the rain soybean prices could return to highs.  So, beans are under pressure from the rain in the forecast, but we may not be out of this weather market yet.  

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

Export sales are the other major driving factor for soybeans.  Last week we saw export sales partially offset by 576,300 MT of cancellations resulting in 415,500 MT for 2013/2014.  This was down 64% from the previous week average and a new marketing year low.  The question remains - how much of the unshipped sales on the books will get canceled (especially by China)?  South American weather is a major factor here too.  If weather is good in South America and the outlook is for a big crop we could see countries canceling US business and buying South American soybeans.  This could mean a bigger US carry over and lower prices.  As we are seeing in corn right now, China will find a way to cancel shipments if they feel they can get better prices or have overbooked their needs.  

Going forward soybean price direction is dependent on South American weather and how the export sales/shipments situation plays out.  If SA weather looks good and cancellations look evident soybeans could see lower to sharply lower prices.  Tomorrow we will see how export sales fared during the holiday and if countries are comfortable enough with SA weather to cancel shipments.  Then we will watch Argentina very closely this weekend into next week to see if they get the advertised rains and what their forecast looks like for the weeks to come.  So, the party may not be over for soybeans just yet, but it might be last call.  

Have a safe and Happy Holiday everyone!  

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

Feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.     

March Corn Daily chart:

March Soybeans Daily chart:

March Wheat Daily chart:

All this means that speculators should be looking for opportunities and producers need to look to lock up some prices. 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

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie

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

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