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May 2013 Archive for Hedging Corn and Soybeans

RSS By: Howard Tyllas, AgWeb.com

Howard Tyllas is currently a member of the Chicago Board of Trade and registered with the Commodity Futures Trading Commission as a floor broker and as a Commodity Trading Advisor.

Hedging July Soybeans & Trade Ideas for 5/24/13

May 25, 2013

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Are you tired of listening to the same BULL ****, and services that do not have a plan if the market goes down instead? Hedge means to take risk off the table, and my service has all producers 100% hedged and they do have most of the upside unhedged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 37 years. Want to become self directed, subscribe now!

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This report was sent to subscribers on 5/23/13 3:30 p.m. Chicago time to be used for trading on 5/24/13.

July Soybeans

After the close recap on 5/24/13: My pivot acted as resistance and was 15.10 1/2, .04 3/4 from the actual high, and my support was 14.70 1/2, .00 3/4 from the actual low.

All charts and numbers for 5/28/13 will be sent in 2 hours from now.

July Soybeans 

Use the same numbers as used on 5/23/13 

15.45                          May contract 2013 High                               
15.24 ½                      May contract expiration price                               
15.10 ½                                                      
------------14.94 ¾      Pivot           
14.79                          Bracket Line support                                  
14.70 ½ XX                                 
                         
5 day chart...         Up from last week same day                                                          
Daily chart   ....    Up                 
Weekly chart ...   Sideways                         
Monthly chart ....Sideways         14.32 is the 200 DMA
ATR 27                                         Balanced 66%

For 5/24/13: I still say "May contract provides resistance, daily numbers support".  
     
November I continue to say "$12.40 ½ is pivotal; bracket line at $12.05 ½ is support, $12.80 resists.    

In my July daily soybean numbers on Thursday my resistance was .01 ¾ from the actual high; my support was .08 ½ from the actual low.        

 

5/24/13:

Grains: "Old crop cash grain markets" are like gunslingers from the Wild West; they have no problem riding into town and shooting it out with anyone who gets into their way. Maybe in the past it seemed like the hedge services and cash sources were like "sheriffs" and were there to protect you, give you "fairness" when selling your grain, and the advice they give you will help you get a better price in the end. But the reality is that many of the same services that "help you" sell for a higher price are the ones who will be buying the grain from you. Conflict of interest? They make matters even worse by having their hands in the seed you buy, and the fertilizer you need. When the futures price goes up, so do the input costs, and when the futures price goes down, input costs slowly come down, kind of like gasoline prices at the pump. The little guy has no control, and is like sitting at a poker table with $100 when the other players have $1,000,000 or more. They can bluff you because losing $100 means nothing to them, where $100 is your entire stake. They can lose $100 by calling a bet without blinking, but with a $100 wager you must decide if this is worth the "final bet" if you lose. In our case, the small farmer is under attack, and the big producers are the ones who are trying to push the small farmers out of the game, and they will be there to buy your farm from you.

My producers have been feeling this for quite some time and it is getting worse, and the main reason that the last few years (since they have my service) that they have posted record profits in spite of what is being "touted" out there, is the fact they became self directed and only need to focus on price, not fundamentals or market chatter. They learned to not risk much on any idea, and that they do not to make every penny of every move up and down.

The cash market this year is like the Wild West, and the reason I said I do not want to play because of the lack of control producers have in the cash market. The less control you have, the more of a victim you become. As a trader, when risk/reward becomes unreasonable, or when things become illogical like today when July went $1.01 over the August contract, I get out and stop to participate in that kind of "crapshoot". Just because I made a lot of money, or "that is the market I trade", is no reason to participate when things get too extreme. I run from it, not get my feet stuck in it. The less control I have, the less I participate. Yes, I can day trade it using my numbers, but holding a position overnight I need a known risk strategy. It is a big difference in trading a futures price with a futures contract or options based on the futures, it is another to participate in the cash market. If the market rallies like it did, the futures make penny for penny with the futures market, whereas the cash market has not reflected what the futures have done and even lost sometimes as much as $.70 in the last 3 days.

Just like the PRC cancelling sales and paying the penalty such as $.50, but then buying it again at the same time for $1 cheaper, the cash market is inventing new ways to make money, and the farmers are on the wrong side of the profit equation. Yes, farmers are getting record basis levels, but it seems they are the one who gets the rug pulled out from under them.

Bottom line now is the same for the futures and cash markets, they can and will do anything. My producers who are keeping a few old crop contracts are looking for the cash to pay way up for remaining old crops, and with 2008 wheat as an example of what cash could do is the reward they seek. They are playing with 10% or less of their 2012 production, so even though the risk and reward is great on each contract, it is a small part of the total production revenue. Just as we have seen all time highs last year, and record or historic spread inversions this year, cash markets are doing its share of volatility. Option volatility jumped with July soybean calls and puts both closing higher on the day. It costs more now to be long or short.

Do not take your cues from the cash if trading futures; do not take your cues from futures when trading the cash. I would have been out of cash soybeans long ago; there is always another trade idea down the road, or opportunities at a support or resistance that I have control of, instead of in the cash market where I have NO CONTROL.  

Back to the futures market, where we are in control of what we do, or not do. July soybean bulls were in command and had little resistance on its way to a $.50 rally, and the objective was clear, to get the shorts buy stops just above the May contracts 2013 high. That is the reason my approach since day one has been, to have daily numbers that I could trade with and be prepared to know where a good place to buy or sell that day no matter the reason why the market got to my numbers. Nothing changed in the two hours it took to run up and down, the only thing that changed was the price. As a trader I could care less the "reasons" the market moved, I never made money from getting the reason right, I made money only when I could sell something for more than I paid for it, or bought it cheaper than I had sold it for. I do not care what a market does once I am out; I care what the market does only when I am in a trade. The fact it gave back almost the entire $.50 gain, the market has a much better chance to sell off from here. If it had closed lower, it would be a "blow off top". It did make a "double top" on the daily continuation chart. This will be a major resistance going forward.

November soybeans are now more influenced by the old crop new crop spread, than new crop pricing alone. July/November was $3 on Thursday, so even if November is up and July is down, it would not indicate any strength in the new crop.

July corn got the buy stops just above $6.69 ($6.69 ¾ high), but could not come close to filling the strong resistance of the big gap left at $6.76. Corn finished well off its high, and looks to close lower on Friday when the June options expire.

December corn is functioning like the new crop soybeans, it is not being priced on its own merit, but rather being used a tool in spreading. The $.60 rally produced in the July contract, allowed a $.25 bounce in the December contract.

You are not going to damage the crop over this weekend, and threats and actual weather concerns are not on the table right now, so the bulls will be hard pressed to keep this rally going without a pullback first. Soybeans went to our top expectations, but corn failed to complete at least the mission of "filling" the gap at $6.76. If the cash gets strong again, it will little influence the futures. Everyone was complaining why the futures are not reflecting the cash, now they are above it! July is over the cash, but cash is going off of the August. If they are paying $.50 over the August, they are paying about $.40 under the July contract.

I am bearish today, and I am bearish Monday too, then I need to see my opponents move to tell you mine. June calls to be rolled to July, I would not give much room above my put protection because I am not bullish at these price levels, and I would rather have $.08 in my pocket than $.20 more upside. The take away for bulls is I would not expect too much from this level, and the bears more of a green light from me. I could be wrong but this is chart based and unbiased opinion. You can be right and the futures market can rally another $.50 or more from here, and if you bet on it you will be rewarded. I would not be surprised if we go up or down $.50 from here, but as a trader and at chart resistances, I want to sell. Fundamentally I want to be short until a threat of a production shortfall occurs.

Make sure your position going into the weekend does not affect you if we are up or down the limit on Monday, that way you will have a stress free holiday, and not have a thought on what the market will do on Tuesday. Then you will truly be able to walk away from the market, yet be protected if it goes down, and in a position to make money if it can rally. This is what I do as a trader, and that way I can have a life and truly have a "day off" mentally. I do not want the gamble unless known risk going into the holidays. Markets are closed, be with the family not in just body but in mind, and that is hard to do when you worry about the gamble that waits when the holiday is over. ALWAYS be comfortable with your risks!

I want to take the sell signals only today and risk .03 ½ in corn and $.06 in soybeans using a buy stop to protect the idea.               

5/23/13:

Grains: July soybeans made new 2013 highs, and the rally will stop when it stops. My resistance numbers are the places where I would take profits if long, and sell to go short. The few producers I have with old crop hedges have locked in at least another $.30 since they sold June calls. The ones that did roll to July already have another $.30 to $.50 more coming if this was expiration, but have yet to roll up the put to the call strike sold. With the August futures contract $.87 less than the 1 month closer July, it is a big risk big reward to hold cash soybeans.

November soybeans had nowhere to go but up being near support for 2013 and with the old crop performance so strong. $12.40 is now pivotal, $12.80 resistance, and $12.05 ½ being the bracket line support. That should be the parameters until the June 28th report. When near support, look at improving the upside by rolling down "cheaply" out of the money calls you are long and reducing the call spread you sold. Here at the pivot, and especially near $12.80, look at improving your downside protection.

July corn ... Subscribe now!

The next few weeks, July soybeans can and will do anything, November soybeans will be range bound using the parameters I gave, so take advantage of the swings. Its future depends more on crop production than all the rest of the fundamentals combined. July corn looks "heavy" but range bound. December corn has established the parameters as it waits for more information on crop production. So take advantage of the price swings, but for now our current coverage allowed us a stress free ride. Anytime protection gets cheap and you need more, get it. 

I expect choppy sloppy trade going into this 3 day weekend. June options expire this Friday. The direction is sideways but can change once we come back from the weekend. I want to day trade the market without bias and risk .03 ½ in corn and .06 in soybeans using a stop to protect any idea.  

5/22/13:

Grains: No surprise the market came $.01 from filling the gap support of $5.11 which is also multiyear low within $.01 each year. Cheerleaders with the name "Bears" on their outfits were also disappointed, and the same reason I am not a "cheerleader" breaking through a significant resistance. My service has taught you the exact opposite. When at a significant support I want to buy and risk a few cents to see if the chart support will hold once again, and if it does I am rewarded nicely, and if it does not I only lose a few cents on the idea of buying chart support. When at a resistance I want to sell and risk a few cents to see if it will hold, and if it does I am rewarded nicely. I KNOW the reason I take a trade, I KNOW where I am wrong and why, and I know where my objective is. Try taking a fundamental trade and having no foundation like I do, how can they tell when they are wrong and limit the risk, and how do they know when to take a profit? Services that have told farmers to hold onto their corn if they cannot get at least $5.50, and sell it in 2014 or 2015 when the price goes up. Really? Really! Bottom line is even if it does get back to $5.50 or $6, was it worth the risk and wait?

What is the difference between $5.95 now and $5.95 back in January? To us, $5.95 is $5.95, and the reason we extended down protection from the $6.50/$5.90 put spread to $6.50/$5.50. Oh, they thought and the services "touted" higher prices, and now they trimmed their expectations, so the "non hedge" until we get higher prices was really the mask for actually "trading the market" from the "bull side". The way we hedge, we use the charts to initiate a hedge, and protect at least $.50 down in case the market does not go higher. We buy even more protection when needed and maybe even sell some upside to pay for it. If it goes higher we will make even more money than the original hedge, and at expiration depending how bullish or bearish or neutral you were (you could be both bull and bear as time went on) will determine how much you captured and the cost for doing so. 

A few of my producers called in and lifted some calls in the old crop, and some took off spreads in the new crop, and some were on the verge of buying more protection but held off for one really good reason, we were at major yearly support. Since buying a put spread is the same thing as selling the market, they all knew they would need to pay a little more below $5.10, but with $5.11 just a few cents below as support; you cannot sell where you are supposed to buy. They all held off. The market proved at least for now, that there was not enough selling created from the planting progress to take it down below $5.11 at this time, but a good forecast for pollination would be easy to go below it then. Old subscribers know all too well that my chart lines are not coincidence and you can see and know how the lines are made and that they are not random. You see and know the reasons they are drawn too. So no surprise it held again. If and when it is broken, $5.10 will be a resistance to be reckoned with.

So here we are, grain market counting the days, and watch the crops grow. Now as always, no matter the "news" or reasons the market goes to and especially an extreme, take advantage of it and risk little to see if the chart level holds. This is what I as a trader have always done, and you my subscribers are doing when you wait for a chart level to risk little on YOUR thoughts and ideas, no matter going long at a support, or selling at a resistance.

July soybeans are nearing their 2013 high so I am indeed a seller for that fact alone, or at least not be long below and so close to there. November soybeans are going nowhere fast, same price parameters as before. 

July corn ... Subscribe Now!

I want to take the sell signals only in July soybeans and risk $.06 using a buy stop to protect the idea. I want to trade corn without bias today and risk .03 ½ using a stop to protect any idea. 
 

 Want to know what I think for tomorrow and going forward?
 

The markets covered daily are Soybeans, Corn, and S&P's.

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Disclaimer:    No guarantee of any kind is implied or possible where projections of future conditions are tempted. Futures trading involve risk. In no event should the content of this be construed as an express or implied promise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.

WASDE Report for 5/10/13

May 10, 2013

Sign up: Free Learn a better way to hedge for farmers

Are you tired of listening to the same BULL ****, and services that do not have a plan if the market goes down instead? Hedge means to take risk off the table, and my service has all producers 100% hedged and they do have most of the upside unhedged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 36 years.

Sign up: Free 1 Day Trail of Daily Numbers & Trade Ideas

WHEAT:  U.S. wheat supplies for 2013/14 are projected at 2,917 million bushels, down 7 percent from 2012/13.  Wheat production is projected at 2,057 million bushels, down 9 percent from last year with reduced prospects for Hard Red Winter wheat.  The all wheat yield, projected at 44.1 bushels per acre, is down 2.2 bushels from the record levels of 2012/13 and 2010/11.  The survey-based forecast for winter wheat production is down 10 percent with the lowest harvested-to-planted ratio since 2006/07 and lower yields as persistent drought and April freezes reduce crop prospects in the southern and central Plains.  Partly offsetting is higher forecast Soft Red Winter wheat production with higher area.  Spring wheat production for 2013/14 is projected to decline 8 percent as reduced durum area and a return to trend yields reduce prospects for durum and other spring wheat. 

Total U.S. wheat use for 2013/14 is projected down 7 percent year-to-year with lower domestic use and exports.  Feed and residual disappearance is projected 70 million bushels lower as larger supplies and lower prices for feed grains in 2013/14 limit wheat feeding by late summer.  Partly offsetting is a 13-million-bushel increase in domestic food use as flour extraction rates fall from a very high level in 2012/13 and consumption grows with population.  Exports for 2013/14 are projected at 925 million bushels, down 100 million from the 2012/13 projection.  Large crops for major export competitors limit opportunities for U.S. wheat.  U.S. ending stocks are projected to decline for a fourth consecutive year.  At 670 million bushels, ending stocks would be down 61 million bushels from the 2012/13 projection.  The all wheat season-average farm price is projected at $6.15 to $7.45 per bushel, down from the record $7.80 projected for 2012/13 as world prices for wheat and coarse grains are expected to decline sharply by fall.

Global 2013/14 wheat supplies are projected 3 percent higher than in 2012/13 with a 51.2-million-ton increase in foreign production more than offsetting a 19.3-million-ton reduction in global beginning stocks and lower forecast production in the United States.  At the projected 701.1 million tons, global production would be a record and up 45.5 million from 2012/13.  Production for 2013/14 is projected higher in all of the world's major exporting countries with the largest increases expected in the FSU-12 and EU-27, up 29.9 million tons and 6.7 million tons, respectively.  Production is projected higher for Australia, Argentina, and Canada, up a collective 6.2 million tons from the current year.  Also affecting global trade prospects in 2013/14 are year-to-year production increases for major importers, the Middle East and North Africa, where weather has been favorable for winter crops since seeding last fall.

Global wheat exports for 2013/14 are projected higher than in 2012/13 with increases expected for FSU-12, Argentina, and India more than offsetting reductions for EU-27 and Australia.  Global wheat consumption is projected 20.0 million tons higher with increases in both feeding and food use.  Wheat feed and residual use is raised for FSU-12 and EU-27 with larger production.  The largest increase in food use is for in India, but lower prices support small increases for many countries.  Global ending stocks for 2013/14 are projected at 186.4 million tons, up 6.2 million on the year.
 
COARSE GRAINS:
  U.S. feed grain supplies for 2013/14 are projected at a record 400.5 million tons, up 25 percent from 2012/13 with higher area and yields expected for corn, sorghum, and oats.  Corn production for 2013/14 is projected at 14.1 billion bushels, up 3.4 billion from 2012/13 when extreme drought and heat reduced yields to their lowest levels since 1995/96.  The 2013/14 corn yield is projected at 158.0 bushels per acre, 5.6 bushels below the weather adjusted trend presented at USDA's Agricultural Outlook Forum in February (www.usda.gov/oce/forum/presentations/Westcott_Jewison.pdf).  The slow start to this year's planting and the likelihood that progress by mid-May will remain well behind the 10-year average reduce prospects for yields.  Corn supplies for 2013/14 are projected at a record 14.9 billion bushels, up 3.0 billion from 2012/13.

U.S. corn use for 2013/14 is projected up 16 percent from 2012/13 on higher feed and residual disappearance, increased use for ethanol, sweeteners, and starch, and a partial recovery in exports.  Feed and residual use for 2013/14 is projected up 925 million bushels reflecting a sharp rebound in residual disappearance with the record crop and an increase in feeding with lower corn prices.  Projected corn use for ethanol is increased 250 million bushels from this month's higher projection for 2012/13.  Lower corn prices and high prices for Renewable Identification Numbers (RINS) support profitability for ethanol producers.
 
U.S. corn exports for 2013/14 are projected 550 million bushels higher than this month's lower projection for 2012/13.  At the projected 1.3 billion bushels, 2013/14 exports are expected to rebound from their lowest level since 1970/71.  An expected fourth straight year of record foreign corn production with large crops in South America and the FSU-12 will provide substantial competition for the United States.  U.S. corn ending stocks are projected at 2.0 billion bushels, up 1.2 billion from 2012/13.  The season-average farm price at $4.30 to $5.10 per bushel is down sharply from the record $6.70 to $7.10 for 2012/13.

Global coarse grain supplies for 2013/14 are projected at a record 1,407.6 million tons, up 113.8 million from 2012/13.  Global corn production for 2013/14 is projected at a record 965.9 million tons.  Foreign corn production is up 23.5 million tons.  The largest increases are projected for the FSU-12, EU-27, and China, but large crops are again expected in 2013/14 for Brazil and Argentina.  Global corn trade is projected higher with increased imports for China more than offsetting a reduction for EU-27.  Spurred by lower prices, smaller year-to-year import increases are projected for a number of countries.  Exports are lowered for Brazil, India, and Argentina, but raised for Ukraine and EU-27.  World corn consumption is projected at a record 936.7 million tons, up 72.8 million from 2012/13 with foreign consumption up 41.5 million.  Global corn ending stocks for 2013/14 are projected up 29.2 million tons on the year.  At 154.6 million tons, stocks would be a 13-year high.

RICE:  Tighter U.S. 2013/14 all rice supplies, forecast down 6 percent from 2012/13 and lower projected use, down 7 percent from 2012/13 result in ending stocks that are down 3 percent from the previous year.  Beginning stocks and production for 2013/14 are both forecast lower from a year ago, while imports are forecast 5 percent larger.  U.S. rice production for 2013/14 is projected at 189.5 million cwt, down 5 percent from 2012/13.  Harvested area is estimated at 2.59 million acres based on average harvested-to-planted ratios for the previous 5 years, the lowest area since 1987/88.  Average all rice yield is projected at 7,317 pounds per acre, down 2 percent from the previous year's record. 

U.S. 2013/14 all rice total use is projected at a 213.0 million cwt, 7 percent below the previous year.  Domestic and residual use is projected at 115.0 million cwt, 4 percent below 2012/13.  All rice exports are projected at 98.0 million cwt, 9 percent below 2012/13, and the lowest since 2008/09.  Long-grain rice exports are projected at 69.0 million, 10 percent below the previous year, and combined medium- and short-grain rice exports at 29.0 million, 7 percent below 2012/13.  U.S. long-grain exports will be limited by a tighter U.S. supply situation, and increased competition among the major South American and Asian exporters.  Exports of medium-grain rice will be constrained by tighter U.S. supplies and greater competition from Egypt and Australia.  U.S. all rice ending stocks for 2013/14 are projected at 33.1 million cwt, 3 percent below the previous year.  Long-grain ending stocks are forecast at 21.9 million cwt, 7 percent above 2012/13, and combined medium- and short-grain rice stocks at 9.0 million, 22 percent below the previous year. 

The U.S. 2013/14 long-grain rice season-average farm price is projected at $13.80 to $14.80 per cwt, compared to a revised $14.20 to $14.60 for the previous year.  The combined medium- and short-grain price is projected at $15.50 to $16.50 per cwt, compared to a revised $15.80 to $16.20 for the year earlier.  The 2013/14 all rice price is projected at $14.30 to $15.30 per cwt, compared to a revised $14.70 to $15.10 per cwt for 2012/13.

Global 2013/14 total supply and use are each projected to reach record levels at 584.7 and 476.8 million tons, respectively, resulting in a 2.4-million increase in world ending stocks. Global 2013/14 rice production is projected at a record 479.3 million tons, up 9.0 million from 2012/13.  Record to near-record rice crops are projected in Asia.  Record crops are projected for the major exporters including India, Thailand, and Vietnam. Additionally, large crops are forecast for other exporters including Burma, Cambodia, and Egypt.  On the importer side, record or near-record crops are forecast for Indonesia, the Philippines, and Sub-Saharan Africa.

Global 2013/14 consumption is projected at a record 476.8 million tons, up 1 percent from the previous year.  Global exports in 2013/14 are projected at 38.9 million tons, up marginally from 2012/13.  India and Thailand are forecast to be the largest global rice exporters in 2013/14 with exports of 8.5 million tons each followed by Vietnam at 7.7 million tons.  Large 2013/14 imports are projected for China, the Middle East, and Sub-Saharan Africa with Nigeria the largest in that region.  China's imports have surged since 2011/12-forecast to be 2.9 million tons in 2012/13 and 3.0 million in 2013/14-making China the largest global rice importer in 2013/14.  China's annual consumption needs have overtaken production since 2012/13.  Strong domestic prices in China have encouraged imports of lower-priced rice from Burma, Pakistan, and Vietnam.  Global 2013/14 ending stocks are expected to increase 2.4 million tons to 107.8 million, the largest since 2001/02. 

OILSEEDS:  U.S. oilseed production for 2013/14 is projected at 100.9 million tons, up 9 percent from 2012/13.  Higher soybean production accounts for most of the increase.  Sunflowerseed, peanut, and cottonseed production are each projected below last year's crops.  Soybean production is projected at a record 3.390 billion bushels, up 375 million from the drought-reduced 2012 crop on slightly higher harvested area and higher yields. Soybean yields are projected at a weather-adjusted trend level of 44.5 bushels per acre, up 4.9 bushels from 2012.  Soybean supplies are projected at 3.530 billion bushels, up 10 percent from 2012/13.  Additional soybean meal exports for 2012/13 are offset by reduced domestic consumption, leaving crush unchanged.  Soybean exports and ending stocks for 2012/13 are also unchanged from last month.

The 2013/14 U.S. soybean crush is projected at 1.695 billion bushels, up 60 million from 2012/13 reflecting increased domestic soybean meal consumption and exports.  Despite increased competition from South America, U.S. soybean meal exports are forecast higher on sharply lower prices.  Soybean exports are projected at 1.450 billion bushels, up 100 million from 2012/13 on increased supplies and competitive prices.  Ending stocks are projected at 265 million bushels, up 140 million from 2012/13.  The U.S. season-average soybean price for 2013/14 is forecast at $9.50 to $11.50 per bushel compared with $14.30 per bushel in 2012/13.  Soybean meal and oil prices are forecast at $280-$320 per short ton and 47-51 cents per pound, respectively.

Global oilseed production for 2013/14 is projected at a record 491.3 million tons, up 4.7 percent from 2012/13 mainly due to increased soybean production.  Global soybean production is projected at 285.5 million tons, up 6 percent.  The Argentina soybean crop is projected at 54.5 million tons, up 3.5 million from 2012/13 on record planted area and higher yields.  The Brazil soybean crop is projected at a record 85 million tons as higher harvested area more than offsets lower yields.  China soybean production is projected at 12 million tons, down 0.6 million from 2012/13 as producers continue to shift area to more profitable crops.  If realized, harvested area at 6.6 million hectares would be down 28 percent in the past 4 years.  Global production of high-oil content seeds (rapeseed and sunflowerseed) is projected up 6.1 percent from 2012/13 on increased rapeseed production in Canada, India, EU-27, and Ukraine, and increased sunflowerseed production in Argentina, EU-27, Russia, Ukraine, and Turkey.  Oilseed supplies are up 5.1 percent from 2012/13.  With crush projected to increase 3.4 percent, global oilseed ending stocks are projected at 82.6 million tons, up 12.3 million. 

Global protein meal consumption is projected to increase 2.7 percent in 2013/14.  Protein meal consumption is projected to increase 3.3 percent in China, accounting for 32 percent of global protein consumption gains.  Global soybean exports are projected at 107.1 million tons, up 11.3 percent from 2012/13.  China soybean imports are projected at 69 million tons, up 10 million from the revised 2012/13 projection, leaving soybean supplies up 5 million tons from the previous year.  Global vegetable oil consumption is projected to rise 3 percent in 2013/14, led by increases for China, India, and Indonesia.

SUGAR:  Projected U.S. sugar supply for fiscal year 2013/14 is up 2.1 percent from 2012/13, as higher beginning stocks and imports more than offset lower production.  Lower beet sugar production reflects reduced area and a return to trend yields, while lower cane sugar production is based on trend yields.  Imports under the tariff rate quota (TRQ) reflect minimum U.S. commitments to import raw and refined sugar and projected shortfall.  The Secretary will establish the TRQ at a later date.  Total use is up 1.8 percent and ending stocks are slightly higher than a year earlier.

For Mexico, 2013/14 supplies are down 1.8 percent from 2012/13, as higher beginning stocks are offset by lower production.  Higher domestic use and lower ending stocks are based on trends in population and reasonable carryover requirements, respectively.  Exports to all destinations are lower, but shipments to the U.S. market are up 5.3 percent from 2012/13.

LIVESTOCK, POULTRY, AND DAIRY:  Total U.S. red meat and poultry production in 2014 is projected to be above 2013 as higher pork and poultry production more than offsets declines in beef production.  Tighter cattle supplies and potential heifer retention during late 2013 and into 2014 are expected to limit cattle available for placement, thereby reducing fed cattle slaughter in 2014.  Lower cow numbers and herd rebuilding will also limit non-fed beef production.  Pork production is forecast to increase more rapidly than in 2013 as lower forecast feed costs provide incentives for producers to expand farrowings and increase carcass weights from 2013 levels.  Broiler and turkey production are forecast higher as lower forecast feed prices encourage expansion despite lower poultry prices. Egg production for 2014 is forecast to expand as producers respond to lower feed costs.  

The total red meat and poultry production forecast for 2013 is lowered from last month as lower pork, broiler, and turkey production more than offsets greater beef production.  Higher cattle placements are expected to support higher fed beef production and cow slaughter has remained relatively high.  However, recent winter storms have affected cattle weights which are lowered slightly from last month.  Pork production is down marginally on lower forecast slaughter in the second of half of 2013.  Broiler production is lowered on hatchery and chick placement data to date, while turkey production is cut on lower poult placements.

Continued year-over-year declines in U.S. beef production are expected to push beef exports lower in 2014.  Pork exports are expected to rebound in 2014 as supplies increase and demand improves.  Broiler exports are forecast higher on expanded supplies and moderating prices.  Beef imports are expected to be higher in 2014 as U.S. cow slaughter declines and domestic non-fed beef supplies tighten.  Pork imports are forecast up fractionally from 2013.

The 2013 red meat export forecast is lowered from last month, largely due to lower expected pork exports.  The beef forecast is adjusted to reflect lower first-quarter exports.  Poultry exports are raised as higher broiler exports more than offset lower turkey exports.

For 2014, cattle prices are forecast to rise above 2013 as supplies continue to tighten. Hog prices are forecast to be slightly lower than 2013 on higher production.  Broiler, turkey, and egg prices are forecast to be below 2013 as production expands.

Cattle price forecasts for 2013 are unchanged from last month. Hog prices are down fractionally from last month on weaker second quarter prices.  Broiler prices are forecast higher as prices remain strong.

Milk production for 2014 is forecast higher as lower feed costs and relatively strong milk prices are expected to support production.  Commercial exports are forecast higher on robust international demand.  Imports will be lower on greater domestic supplies.  With higher domestic production, cheese, butter, and whey prices are forecast lower than last year, while nonfat dry milk (NDM) is higher largely on continued strength in international demand.  Both Class III and Class IV prices are forecast lower.  In the case of Class IV, lower forecast butter prices more than offset higher NDM prices.  The all milk price is forecast at $18.85 to $19.85 per cwt for 2014.

Forecast milk production in 2013 is unchanged from last month.  Imports are raised.  Exports are higher as abundant U.S. supplies and competitive prices are expected to spur foreign demand.  Cheese, butter, and NDM prices are raised from last month while whey is lower.  The Class III price is lowered as lower whey prices more than offset greater cheese prices.  Class IV is up reflecting higher prices for butter and NDM.  The all milk price is forecast at $19.50 to $20.00 per cwt.

COTTON:  The U.S. cotton projections for 2013/14 include lower production, exports, and ending stocks compared with 2012/13.  Projected production is reduced 19 percent to 14.0 million bales, based on regional average abandonment and yields.  Abandonment for the Southwest region is projected at 25 percent due to continued drought conditions.  Domestic mill use is projected at 3.5 million bales, 100,000 bales above 2012/13.  Exports are projected at 11.5 million bales, down 13 percent from 2012/13, due to the smaller available domestic supply and lower imports by China.  Ending stocks are reduced to 3.0 million bales, equal to 20 percent of total use, which is well below the previous 10-year average.  The forecast range for the marketing year average price received by producers is 68.0 to 88.0 cents per pound, compared with 72.0 cents estimated for 2012/13.

The initial 2013/14 world cotton projections show world ending stocks of nearly 93 million bales, the third consecutive seasonal record, as China's policy of stockpiling cotton in its national reserve is assumed to continue.  World production is projected nearly 3 percent lower than 2012/13 at 117.8 million bales, as reductions, mainly for the United States, China, Turkey, Greece, and Mexico, are partially offset by increases for Brazil, India, Pakistan, and Australia.  World consumption is expected to rise 2 percent due to modest growth in world GDP.  World trade is expected to fall 12 percent, as sharply lower imports by China and India are partially offset by increases for Pakistan, Turkey, Mexico and others.  World ending stocks outside of China are projected to fall nearly 2.0 million bales.

China's national reserve stocks are currently expected to reach nearly 40 million bales at the end of 2012/13.  Based on the government of China's current reserve purchase and release prices and import quota policies, USDA is projecting that China will import 12.0 million bales in 2013/14 and will add 10 million bales to ending stocks as reserve purchases exceed reserve sales.  The resulting projected China ending stocks of 58.2 million bales would account for 63 percent of world stocks.

For 2012/13, the final U.S. crop production estimate of 17.3 million bales is virtually unchanged from last month.  U.S. exports are raised 250,000 bales, reflecting recent activity and stronger expected imports by China, which are raised 1.8 million bales from last month.  India's production and consumption also show significant increases.

 

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Disclaimer:    No guarantee of any kind is implied or possible where projections of future conditions are tempted. Futures trading involve risk.In no event should the content of this be construed as an express or implied romise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.


 

May Soybeans Hedging & Trade Ideas for 5/2/13

May 03, 2013

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Are you tired of listening to the same BULL ****, and services that do not have a plan if the market goes down instead? Hedge means to take risk off the table, and my service has all producers 100% hedged and they do have most of the upside unhedged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 37 years.

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This report was sent to subscribers on 5/1/13 2:45 p.m. Chicago time to be used for trading on 5/2/13.

May Soybeans

After the close recap on 5/2/13: My resistance was 14.48 1/2, .05 3/4 from the actual high, and my pivot acted as support and was 14.39, .03 1/4 (only .00 1/2 in open outcry) from the actual low.

All charts and numbers for 5/3/13 have already been sent to subscribers at 2:00 pm.

May Soybeans      
                                     
                                 

14.67 ¾ FG                              
14.48 ½                        near 200 DMA       
------------14.39            Pivotal Downtrend Line            
14.29 ¼                                  
14.25                                            
                                           
5 day chart...         Up from last week same day                                                       
Daily chart   ....    Sideways               
Weekly chart ...   Down                          
Monthly chart ....Sideways     14.50 ¾ is the 200 DMA
ATR 26                                 Balanced 40%

 

 

 May chart is on the top, November chart is on the bottom. 

For 5/2/13: I continue to say "Bracket lines resist, and the downtrend line at $14.39 ½ is pivotal now". Daily numbers support. 

November Downtrend line at 12.39 is strong resistance; bracket lines at $12.02 ½ and 11.86 ½ are supports. Downtrend lines at $12.40 was $.00 ¼ from the high on Tuesday.  

In my May daily soybean numbers on Wednesday my pivot acted as resistance and was .01 ½ from the actual high, my support was .04 ¼ from the actual low. 

5/2/13: 

Grains: A week from Friday the USDA will issue its May crop report, and will estimate this year's crop yields. We will have a good working estimate to work with unless weather becomes extreme. Next week's weather will be a driver of perception for planting progress. The bulls want to see continued delays, and the bears want "open sky". Friday or Sunday night weather forecast will be the one the market will take its cues from. We take our cues when at a support we look to improve the upside, and at resistances we look to improve the downside, which many of my producers have done this week.

May soybeans plunged $.60 in 2 days giving back all but $.06 ¾ for the week. Market can go either way now, with no strong entry since we are on the high side of the middle of the bracket lines. Below the pivotal downtrend line I would rather be short; above it I would rather be long. Trading an extreme seems to be the hardest thing to do going against the market, but actually it is the easiest because it is the final level, easier than the levels before it.  

November soybeans actually are $.01 lower for the week. I think my producers who called in to capture old crop gains by raising the puts up to the call strike sold, and also lowered their November $12.20 or higher puts down to $11.80 or lower, taking advantage of the market's rally, all had the same thing to say even though I did not ask the question, they all said they think the market will come down greatly once planting gets underway. I agree. Some did some on the way up on Monday, more on Tuesday, and a little on Wednesday, but I would want to do as much as possible before Friday. I would capture the old crop by extending up the put, and I would lower my soybean protection down to at least $11.80 but protection down to the low of 2012 at $11.40 will probably be needed sooner rather than later.

Since I do not know what the market is thinking right now, I would day trade without bias and risk $.03 ½ in corn and $.06 in soybeans using a stop to protect any idea. I do not know if the market knows what it is thinking right now, I think they are trading the weather and perceptions of questionable fundamentals in their minds. I just want to take advantage of my numbers, and keep my eye on the charts longer term into the end of November when the December options expire.  

5/1/13:

Grains: Bracket lines were drawn last year and it is no surprise rather we expect that those lines would act as strong resistance, and once again they have. No surprise that November soybeans rallied to and "kissed" the downtrend line, and provided an excellent reward for risking little that the line would once again hold. You could have made enough that it would take the next 3 times at a line to fail to give it back. Risk little for possible nice gains, and an approach that has the trade idea of in this case "to sell it if it gets to the line" way before the possibility that we could even rally up to there. When the stocks report came out and May corn closed limit down, I said for whatever reason we could get near there it will be a place to get short, and do whatever you can to improve the downside. We just rallied $.57 off the low of last Wednesday and came $.02 ¼ from filling the gap at $6.95 ¼, so how hard was it to take that sell signal? No matter how bullish I would be (I am not) I would ALWAYS take a profit near there. The risk is much greater than the reward of it busting through a strong resistance. December corn came $.01 from the bracket line resistance at $5.71 and that line has been in place since last summer and was excellent support in January 2013, as well as it has been excellent resistance in March and April.

If you think for a minute that the way I use charts is coincidence, than you are wasting time and not taking advantage of the wisdom I am giving you. I did what you are doing (observation) for a couple of years and with many different markets even if I did not trade them but wanted to see if it was just grain charts or ALL charts. I could not believe something so easy is believable in the long run, but by the time I bought my membership in 1976 I was completely convinced. The next few years I refined what was most valuable, and how to trade a market if I knew the high and low (my numbers) for the day. One thing I learned was that the 3rd time at a line was the strongest time for the line to hold, as witnessed on the November chart at $12.40 on Tuesday. From the beginning and is still my approach, is to risk little on the "bet" that the lines (or gap) will hold. I learned no matter what my trade idea was even a "what if" weather bet, to never risk much to see if it will hold. If it is going to hold it will hold, if not, I do not need to lose another $.10 to $.30 to be convinced it did not hold.

99 out of 100 people are "afraid" that if they get out or stopped out, that the market would then go their way and they would have made "all this money". But most likely they will lose more money in a losing trade. Not making money is one thing, but losing money staying in a losing trade is another. I am never concerned what a market does once I am out, I worry about losing more money in a trade idea that I have a parameter to exit and do not. I know where I am wrong BEFORE I enter any trade idea, not I will see what happens after I enter a trade.

Trading the fundamentals, good luck with that, and trading weather forecasts are like trading the lottery, many more losers than winners, because even if you get the forecast right, you might not get the market reaction right or the aftermath. "Analysts" are happy to have this weather to analyze, they were running out of things to talk about, so the snail pace planting, and the cold wet weather giving them plenty of room for disagreement, and then the bulls can read what they want, and the bears can believe in and listen to who they want (I want you to think for yourself). Look at the drought areas a few months ago, and the calls for what production will be as a result, and then the cool wet weather now, and the debates on what the affect on production will be. Talk about a moving target! Do you really think that is a good way to make a bet? Does it give you a parameter for risk on the idea? Trading for me is not about what drives a market, trading should strictly be in entering a trade idea, having a place to exit if wrong, and an objective if right.   

I want to take the sell signals only today and risk $.03 ½ in corn and $.06 in soybeans using a stop to protect the idea. 

If you are a producer and want to learn from me "a better way to hedge", feel free to call me or email me and inquire. I will answer any question you have on futures or options on futures, and the services I provide. 

Want to know what I think for tomorrow and going forward?

The markets covered daily are Soybeans, Corn, and S&P's.

 

HowardTyllas Daily Numbers & Trade Ideas is designed to help you plan your trading and hedging strategies for the coming day through harvest.

$199.00 USD for each month, renewable monthly

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Howard Tyllas

Put yourself in a position to make money, use the daily numbers service!

Email: dailynumbers@futuresflight.com
http://www.futuresflight.com/

   Tel.1-312-823-9189,  1-702-405-7245

Disclaimer:    No guarantee of any kind is implied or possible where projections of future conditions are tempted. Futures trading involve risk.In no event should the content of this be construed as an express or implied romise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.

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