Sep 15, 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.

The Absence of the USDA is having an Effect on Grains Markets

Oct 08, 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.        

Today it was announced that the October USDA report would be postponed with no make up day rescheduled.  Aside from the very important October USDA WASDE report the market has missed out on weekly crop progress reports, export sales, export inspections, and the October 15th NOPA crush numbers are in jeopardy.  This means that markets are flying blind with out the data to get an accurate depiction of supply and demand.  

Now, I have certainly criticized the USDA in the past for various reasons, and I do believe that the USDA needs to remember their purpose and strive to provide the most accurate and unbiased information possible as I cannot say for sure they have in recent years.  But in a vacuum of inputs the grains markets are left without direction.  This "flying blind" is doing markets a disservice.  

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

In particular the October USDA report is a big report, especially this year, because it is the first report to give actual field based numbers rather then statistical based numbers.  This means that there should be USDA crop scouts out in fields taking samples and gathering data.  This is certainly not happening right now and will take time even when the USDA is back up and running (walking quickly at best).  This field based report is very important this year in particular because it was such an odd growing season with a cold wet spring into summer, a warmer June, a record cool July, and a hot and dry August.  There has been lots of arguments and speculation over the quality of the US crop for months now and just as we are leading up to some answers the US government partially shuts down.  

In the mean time the USDA's last word was a bearish grain stocks number, particularly for corn and soybeans.  The Quarterly grain stocks report suggested higher then expected beginning stocks as well as possibly lighter then expected demand.  I fear that with this last bearish note from the USDA, along with no fresh USDA projections, harvest pressure and talk that yields may be coming in quite a bit better then expected could lead to markets to push lower, maybe even lower then they should.  We have not seen it yet after one week of the USDA going dark, but as this situation lingers things may start to change.   

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. 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

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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