Sep 2, 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.

Pre USDA Report Thoughts

May 09, 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.   

 

Pre USDA Report Thoughts

The trade is mostly looking for a bearish USDA monthly report tomorrow.  Grain markets reflect that as we have seen lower prices over the last week and a half.  However, the average trade guesses are looking for large changes compared to last months report and I wonder how willing the USDA will be to make any wide scale changes this month.  New crop supply is far from being determined and even acreage numbers will change dramatically from the USDA's current estimates.  Keep in mind that the USDA is most likely going to stick to their March 30 Planting Projections acreage estimates until they issue their own final plantings numbers on June 29.  And, the USDA may choose to hold off for now on making any major changes to the old crop balance sheet as well for the sake of wanting to get a better handle on how far we will have to carry old crop supplies as an early harvest would take significant pressure off of old crop ending stocks.

So, if we do see an unchanged or a small change report tomorrow the likely knee jerk reaction will be that it is not as bearish as we have factored into the market and we could get a bullish reaction.  But again, this would be based on the idea that we have spent the last week and a half pushing prices down in anticipation of a bearish report.  However, it could be argued that good weather along with a record planting pace and a negative turn in outside markets were the real driving factors in the price decline and not the report.  Ultimately, it looks like the dollar is poised to strengthen and it seems that speculators have been moving out of commodities with crude oil trading below $100 a barrel and gold under $1600 an oz for the first time in a while.  Couple this with fast planting and good weather and it could be difficult to get a sustained rally at this time.

*** I will be unavailable for comment after 10:30 tomorrow until Monday morning ***

See December Corn Daily chart:

See November Soybean Daily chart:

This means that speculators should be looking for opportunities and producers need to make sure they lock up prices that makes sense for their bottom line.  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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