Sep 20, 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.

Adding Pennies to Corn Bushels

Sep 18, 2014

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.       

Right now corn seems stuck in a strong down trend.  The frost damage fueled attempt at a bounce from earlier this week has been erased and corn is once again flirting with contract lows.  Enormous yield reports coming from Central Illinois and yet another private analyst's super sized yield estimate has moved into the focus for now.  Going forward the emphasis on corn has to be adding pennies to bushels to help with the bottom line.  While short positions have worked well to this point could we getting close to a time where it may be beneficial to be looking for a strategy to capitalize on a bounce?  

Earlier this week a hard frost damaged many crops in the northern growing areas.  Estimates suggest that as much as ten million acres were effected.  At this point the true amount of damage is a little unclear as we have heard mixed reports.  Some will say that the damage was fairly minor and that the freeze may have only taken 5% of the remaining yield potential while others report near total loss in some areas.  For the moment the market is looking at this as having little impact on the total national production figure.  Combines will give us a much better picture but, we would not be surprised if the market is underestimating the impact on production.

Sign up for our Morning Ag Hedge newsletter!  Sign up here: http://www.zaner.com/offers/?page=17  

In the mean time the bear camp and the market as a whole has taken hold of very big yield reports coming out of some early harvest efforts.  There have been reports coming out of Southern and Central growing areas that have been very large and well above previous record for the area.  To an extent the market should be expecting this as most of the huge yield reports are coming from areas that we knew were the best looking crops.  It will be interesting to see what happens as the harvest moves further North, especially into areas effected by early frost.  We would expect yield reports to less and less fantastic in the next few weeks.  We may even get to the point where we can legitimately question the huge national average yield estimates that are flying around the market right now.  There is also a question of planted acreage after a wet spring.  Some analysts are looking for a 500-800k reduction in acreage and this could further cut into the production number.  If this were to be the case, could we expect a mid-harvest rally off of lows?  

If we were to get a mid-harvest rally off of lows it may be an opportunity for producers not only to sell cash corn higher but maybe to also add to the bottom line of sold bushels as well.  It is always a very tricky proposition to try to pick a top or a bottom in any market, however, and you would have to play your cards just right.  For this reason a more limited risk option strategy may be a useful tool.  If it is possible to spend 8-10 cents on a long options or long vertical spread trade that has a potential value of 60 cents this may be an interesting thought.  If you can define your risk to no more then 8-10 cents per 5,000 bushel and have a realistic 25-50 objective it may be a reasonable risk/reward proposition.  Keep in mind however, this is not a true hedge for producers.  It will not help protect the downside.  But, these are interesting times for grain marketing and if you can live with the risk it may be a way to add pennies (hopefully dimes) to corn bushels.  

We currently have a strategy that we are looking at for producers who are looking for ways to do something like this.  Right now we think it is too early for something of this nature as we still have a big harvest in front of us.  However we do think this could be an opportunity at some point in the near future and we do have a specific set up we are looking for.  Give us a call if you would like to hear more about it.  

We have awesome CRB wall charts to give out!  They are weekly bar charts that go back 10 years to Oct, 2003 and are about the size of a poster.  If you'd like one sign up here - Corn: http://www.zaner.com/offers/index.asp?page=20

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.

Is a Damaging Frost Coming?

Sep 04, 2014

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.       

In the last few days the soybean market has been focused on two things.  One, crop conditions improved by 2% last week.  Two, analysts are starting to release production estimates in front of the September USDA report and we have heard some very big production and national average yield numbers.  Both of these suggest that in fact this big crop is getting bigger.  This has put a lot of pressure on soybean prices pushing the November soybeans to new contract lows.  However, there is a potential weather issue that has been creeping into forecasts that the trade has largely ignored to this point.  Frost.  

As of right now there are some weather forecast models that are calling for a cold blast during the September 12-15 time frame which if realized could result in frost and potential freeze damage for the Northwestern Plains, the Northwestern corn belt and maybe even part of the Midwest.  This is a big if however as there is substantial disagreement between the forecast models on this event.  The GFS model, seems to be the most threatening, was a little cooler in the NW Plains and Midwest for the Sep 12-14 time frame as of mid-day Thursday.  

We have awesome CRB wall charts to give out!  They are weekly bar charts that go back 10 years to Oct, 2003 and are about the size of a poster.  If you'd like one sign up here - Soybeans: http://www.zaner.com/offers/index.asp?page=21

For now many forecasters are expecting this cold blast to moderate and for the vast majority of the US growing area to miss out on any major damage.  This certainly could be the case as most of the areas that could potentially be effected have had good rains recently and humidity levels are high.  Right now the dew point in North Dakota ranges from 48-64 which would make a hard freeze very unlikely.  The idea is that air can change temperatures quickly but water takes more time.  For a hard frost to occur these dew points would have to drop significantly in the next week and a half and that would take a lot of wind and dry air to flush out the humidity.  

It is also not exactly clear what losses would look like if this were to occur ten days to two weeks from now.  We have hear many reports on crops in the areas that could be affected and there has been a lot of variance on where crops will be at that time.  Some producers suggest this could be a devastating event if it were to happen.  Others suggest that at that point it may make little difference for soybeans and take a bit off the top end for corn.  

This is likely why the soybean market has chosen to ignore this frost threat for now and focus on the very good crop conditions and the big production potential.  However, if this frost/freeze event is still in the forecast next week confidence in this event will begin to build and the market could quickly shift its attention to potential production losses.  

Sign up for our Morning Ag Hedge newsletter!  Sign up here: http://www.zaner.com/offers/?page=17  

*Next week we will be in North Dakota for the Big Iron Farm show and to visit some clients.  So, I will have more to say about the North Dakota crop when we get back.  If you are going to Big Iron come say hi.  We are part of the Marketing Panel on Tuesday Sep 9.  TheTedspread will return Sep 16.

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.

Are Big Crops getting Bigger?

Sep 02, 2014

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.       

At a time of year where we would normally be expecting corn and soybean conditions to begin to decline this years big crop is bucking the trend.  Tuesday afternoon (delayed due to holiday) the USDA showed crop conditions improving for corn and soybeans.  With conditions improving this late in the growing season does this mean that already big crops are getting bigger?  

As of the week ending August 31st the USDA is reporting corn crop conditions at 74% good to excellent.  This is a 1% increase from the previous week.  This means that at this point this is the best rated corn crop in almost 20 years.  This is reigniting the talk about super sized yields and bigger production estimates.  While we will likely have a new record national average yield and a new record production figure will it really be as big as some of the more aggressive estimates?  

The very good crop conditions and the very large production expectations highlight the potential of this corn crop.  However, we may or may not realize the full potential we have out there right now.  This crop conditions report also showed that the corn crop was 8% mature at this point compared to the 5-year average of 16%.  So, there is a good percentage of the corn crop that is a bit behind and we are getting to the end of the growing season.  An early frost, or at this point even a normal frost could cut into the potential of this corn crop and limit the upside potential of the national average yield.  Most weather forecasts at this point are not looking at a catastrophic frost event, but the situation will need to be monitored closely.  

We have awesome CRB wall charts to give out!  They are weekly bar charts that go back 10 years to Oct, 2003 and are about the size of a poster.  If you'd like one sign up here - Corn: http://www.zaner.com/offers/index.asp?page=20  

For soybeans the USDA reported the crop at 72% good to excellent for the week ended August 31st.  This is a 2% increase over last week and represents historically good soybean crop conditions.  This comes at a time where, like corn, we would normally expect conditions to begin to decline.  This also comes after a week that saw a lot of talk about soybean disease, namely SDS and white mold.  Diseases are still a concern, but this 2% increase in soybean conditions may put that discussion to rest for now.  

Soybeans may have benefited the most from the consistent rains most areas have received since August 1.  Late season rains may have added bushels and weight to soybean crops.  Soybeans are also not as far behind as corn is.  The USDA is reporting that 5% of the crop is dropping leaves compared to the 5-year average at 7% and last year at 3%.  This may give soybeans a better shot at getting to the finish line but there is a lot of variance in fields right now and frost may be a limiting factor to the national average soybean yield as well.  However, with soybean crops rated 72% good to excellent and a least a week or two before the first chance at a frost it seems that the soybean crop could have gotten bigger in the last few weeks.  

In all big crops could be getting bigger.  The potential for corn and soybeans certainly has gotten bigger with crop conditions improving.  However, it will take a little more time to react full potential.  Weather and when and where we get the first frost of the season will have a lot to say about how close these big corn and soybean crops get to their potential.  

Sign up for our Morning Ag Hedge newsletter!  Sign up here: 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.

Is there Cause for Concern about the Soybean Crop?

Aug 26, 2014

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.       

After a week of fairly wide spread rains the soybean crop conditions came in at 70% good to excellent.  While this is still a very good rating for this time of year it is actually a 1% decline from the previous week.  There has also been a lot of talk about diseases popping up this week.  Should we begin to worry about the soybean crop?  

As of the week ending August 24th the USDA NASS reports the soybean crop condition at 70% good to excellent.  The biggest drop came from Kansas where conditions were down 5% in the G-E category.  The biggest improvement was in North Dakota, up 3%, while 4 other states improved by 2%.  Overall this is the time of year where we expect conditions to begin to decline, but with corn up 1% and all of the rain last week some analysts thought we could see one more improvement.  

The drop in conditions may be somewhat attributed to SDS, white mold and other diseases.  There has been a lot of talk this week about SDS (sudden death syndrome) in particular.  Even though the pro farmer crop tour last week did see some SDS it was not a big topic of conversation in their yield assessment.  Reading between the lines it may be that this is the reason such high pod counts did not translate into a much bigger yield.  And, SDS at this point in the growing season may not have a huge impact on the national average yield.  As a soybean producer in Indiana put it - "August 26, meh.  July 26 it's a catastrophe.  We get it every year here, kinda used to it now."  

Sign up for our Morning Ag Hedge newsletter!  Sign up here: http://www.zaner.com/offers/?page=17  

On the other end of the spectrum, the North Dakota crop is looking great.  In most years this would not really mean a whole lot, but rail issues and the nations worst corn basis has encouraged a 1.35 million acre increase in soybeans according to the NASS.  This gives North Dakota the 4th most soybean acres in the nation this year behind only Illinois, Iowa and Minnesota.  North Dakota's soybean crop conditions are 75% good to excellent.  Many years ND is a drag on the national average soybean yield but this year they could really help push it higher.  

The bottom line is that at this stage of the growing season SDS, white mold and other diseases may not have a huge impact on national average yield.  This may put a bit of a cap on the upside potential, but crops in the northern states, North Dakota in particular could offset or even more then offset any yield reductions in the I states.  Weather and crop conditions will need to be monitored closely however as an early frost or a much more widespread SDS issue would have an impact.

We have awesome CRB wall charts to give out!  They are weekly bar charts that go back 10 years to Oct, 2003 and are about the size of a poster.  If you'd like one sign up here - Soybeans: http://www.zaner.com/offers/index.asp?page=21

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.

Is the Low in for Dec Corn?

Aug 21, 2014

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.       

This is one of the burning questions in the grains markets at the moment - Is the low in for December corn?  An argument can be made for either side of this debate.  One thing we can mostly all agree on is that any rally in corn could be limited.  But, will the December contract see new lows before expiration?  

There is a lot of convincing things you can say about the lows in corn being in for now.  From a fundamental standpoint the most bearish news about the size of the crop is likely behind us.  A few weeks ago many analysts were talking about some super sized yield forecasts.  Most analysts are now looking at the national average corn yield a little over or a little under 170 compared to the 174-176 estimates we had been hearing.  Now that most of the trade has come back down to reality the thought is that we will still have a record yield and a record crop but not by as huge of a margin.  So the market may have already factored in bigger expectations then the reality.  

Demand has also grown substantially with lower corn prices.  From the 2012/2013 to the 2013/2014 marketing year corn usage increase a little over 2.4 billion bushels!  To put this in perspective this is well over twice the projected carry out from the current marketing year.  The 2012/2013 was a drought shortened crop that saw record high prices which rationed demand substantially and the sharp increase in demand for 2013/2014 was in large part due to pent up demand from the previous marketing season.  However, it is still a very good example of how demand can grow with lower prices.  So far export demand is been impressive for the new crop corn.  

Sign up for our Morning Ag Hedge newsletter!  Sign up here: http://www.zaner.com/offers/?page=17  

From a technical standpoint a bullish argument can be made as well.  On August 4th December corn made a new contract low and then ended up closing over the previous day's high.  This is called a key reversal and can sometimes be an early indicator of a change in trend.  Then on August 12th, the day of the August USDA WASDE report, December corn came 1 tick away from putting in a second key reversal.  And, on a weekly chart December corn posted a weekly key reversal last week.  When you put all of this together you can build a strong technical case for the lows being in for December corn.  

On the other side of the coin however the upcoming harvest has the potential to put a lot of pressure on the corn market.  We are in a much different position this year then last year as far as the storage situation goes.  There was a huge amount of available storage going into last year's harvest.  This is mostly due to the record high prices of the previous summer motivating guys to clean out the bins and sell everything.  This year there is still a large amount, I'll argue even more then the USDA knows about, of corn sitting in storage.  To make things worse it seems like too many producers waited too long to make sales and there is a lot of unpriced corn out there and much of it could get priced during harvest.  This could cause substantial pressure to the cash market and futures market as well.  If this is the case we certainly could still see new lows in December corn even though the crop might not be as big as what the market was talking about a few weeks ago.  

Longer term I do think we will see higher corn prices.  Once we get past that initial harvest pressure corn prices could have a good chance of going higher.  Low priced corn at harvest could bring in substantial buying from global and domestic end users.  Also, the price of corn can only stay below the cost of production for so long before we don not plant any more corn.  Corn will have work to do to buy some acres as producers ponder planting intentions.  The way the board is now there is no incentive to plant corn and every incentive to plant soybeans.  However, this might not be what the world needs at this point.  With record acreage in the US and South America and record stocks of oil seeds in general we may have bought more then enough acres globally. 

In the short term I am concerned that December corn could still make new lows as we get into harvest even though this crop might not be as big as once expected.  Cash sales coming off the combine may bee to much pressure to keep corn from putting in a new contract low.  However, longer term corn may need to see higher prices to avoid a sharp drop in acreage next year.  

We have awesome CRB wall charts to give out!  They are weekly bar charts that go back 10 years to Oct, 2003 and are about the size of a poster.  If you'd like one sign up here - Corn: http://www.zaner.com/offers/index.asp?page=20  

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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