The Ted Spread
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.
Waiting for Rain
Jan 29, 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.
Another quiet day in the markets today as grains seem content to hold current prices while waiting to see how weather progresses in key dry areas in South America. Much of the South America corn and soybean crops are at key moisture sensitive stages of growth. After a near perfect growing season some of Brazil and much of Argentina have turned hot and dry threatening stress during pollination and pod set. With rain in the forecast but less confidence after less then expected precip last weekend the markets seem stuck while we wait to get a better grasp on the South American crop.
There is lots of pressure on this years South American corn and soybean crops. Drought has left the US and the world with tight balance sheets. A big production number from South America will go a long way to ease tightness on global balance sheets and may even ease tightness in the US. If SA comes up short there will be tight stocks at least until the US harvest meaning that prices will likely head back toward highs going into the US growing season. So weather the weather is favorable or harsh will likely determine market direction for months to come.
CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=tseifrie
Currently the driest areas are in Southern Brazil and Argentina. And, right now they are hot which is moving crops toward stress. As of the noon forecast there is a rain event Thursday through Sunday with 90-100% coverage of 0.3 - 1 inch. This will help ease stress from building but as of right now stress will likely return with the 2 week forecast being hot and dry. Also, there is some scepticism about this upcoming rain event as rains last week were less then expected.
So, for now its a waiting game. Markets will likely react or over-react to any changes in the forecast. Here we are in a full on weather market at the end of January... In the mean time I am off to Top Producer, hope to see you there!
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March Corn Daily chart:
March Soybeans Daily chart:
March 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 $7.00 and soybeans near $14.00. 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 firstname.lastname@example.org
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