Jul 28, 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.

Price Action for Corn And Wheat Gets a Little More Positive

Aug 06, 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.        

Corn and wheat were under pressure early today but bounced well off the lows going into the close.  Soybeans however remained under pressure as they shed some weather premium.  Technical indicators point to very oversold grain markets and could be suggesting a bounce or sideways trade in the near future.  

After a tough day yesterday and early selling pressure today wheat was able to manage a positive close on the day.  Corn closed lower on the day, but for the second day in a row found some buying interest in the last few minutes.  Both corn and wheat could be due for a bounce but for different reasons.  Now that the bulk of the harvest pressure has fallen away for the wheat it could be time for a post harvest bounce.  Most likely any bounce in wheat would be short and unimpressive however if corn and soybeans stay under pressure.   

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

Corn could be due for a bounce here too.  The corn market has worked hard in the last few weeks to take weather uncertainty out of the market once we knew corn would get through pollination without any major issues.  Now that the hot and dry weather uncertainty has mostly been pulled out, corn has gotten very oversold from a technical standpoint.  And, there may be a new weather issue lurking around the corner.  Corn conditions are very good right now in most places however progress is behind.  Late planting due to a cold and wet spring along with below average temps in the last few weeks has left the crop a week to ten days behind.  This could leave the door open for frost damage.  Even though most forecasters are not calling for an early frost we might need a little more time then normal which could be risky if temperatures do not start getting much warmer for August.  

Soybeans may still have some weather premium to pull out of prices.  The key moisture sensitive stage for soybeans comes later then for corn, so in many years soybeans will hold onto weather premium longer until we have a better idea of how weather will be for pod set.  Now that we are into August and the weather forecast looks mostly normal it might be time to take out some more weather premium as the uncertainty falls away.  Soybeans may be in a sense playing catch up to corn for a week or so.  Here too however, weather may become a positive force at some point with progress being behind.  

So grains as a whole have been under quite a bit of pressure lately, but price action in corn and wheat has been a little better to start the week.  From a technical perspective grains markets are very oversold.  Corn and wheat may be at a point where they can bounce or trade sideways to correct this oversold condition.  Keep an eye on corn and wheat, and stay tuned for weather as at some point markets could get concerned about crops being behind and the possibility of frost damage.  

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.   

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 $5.00 and soybeans near $12.00. 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.

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