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December 2012 Archive for 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.

Corn and Wheat Hold Support, Soybeans Fail at Resistance

Dec 13, 2012

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.   

Mixed markets today with soybeans attempting to rally on good export sales while corn and wheat try to extend to the downside.  In the end technical levels were held today by all three.

Export sales for corn this morning were within the range of guesses but better then what we have seen in a few weeks.  However, sales are still very poor overall especially for this time of year.  The overall lack of demand right now makes it very difficult to get excited about how dry it still is or how tight the balance sheet is.  The idea is that there is still time this winter to get some good moisture and if exports and demand and cattle on feed numbers remain poor the USDA will likely have to raise ending stocks at some point taking some pressure off of the tight balance sheet and alleviating the notion of price rationing.  We certainly may be set up for another drought year next year, but the market probably can not get to excited about dryness until we get closer to the growing season.  Really the only thing keeping corn from a downside breakout is the support from here to $7.00 and the relative strength in soybeans.  However, we are not far away from talking about acreage and when we do start to get into that conversation we could find ourselves talking about how soybeans need to gain on corn to buy acres.

Soybeans had another week of great export sales.  And now is the time if we are going to do it.  The US will only be relevant in the global export market until South America is harvested and at the ports.  South American weather continues to be good and is tempering the bullishness of strong export sales.  If South America weather stays good through pod set then they will have a monster crop to sell at better prices and end users will do their best to wait on what they can.  From a technical perspective soybeans were able to rally up to test 50-day moving average resistance for the second time in 5 trade days and failed yet again.  However, the failure today was not as disappointing as last Friday when soybeans made a new recent high and hit the 50-day moving average at 1498 then proceeded to sell off 28 cents and close below the previous day's low posting a sweeping outside reversal day.  So, with today's not as terrible failure soybeans leave the door open for another test of resistance.

Wheat was shocked on Tuesday's USDA report and is still under pressure from higher then expected US and world stocks.  Wheat had ok export sales but was under pressure early anyway.  The early pressure eased up mid day as Argentina lowered their production estimate.  They are now projecting their wheat crop 30% lower then last year.  Wheat certainly has its bullish news to talk about, but the over riding factor is weak global demand and large ending stocks.  From a technical perspective wheat was able to manage a close above the psychological support at $8.00 and the 200-day moving average.  This brought in some speculative, bottom picking buying in late.  Wheat is on the verge of an extended downside breakout with the 200-day moving average acting as last ditch support.  Wheat needs to hold here to stay in this longer term sideways pattern.

***  This is my last posting of the year as I will be taking the family to the islands.  I wish everyone a very cheerful holiday, and only the very best for the new year.  Thank you everyone for a wonderful year, words do not describe how much I appreciate the support.  Talk to you soon.  God bless...

Sign up for our Morning Ag Comments: http://www.zaner.com/offers/?page=17

March Corn Daily chart:

January 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 above $7.00 and soybeans near $15.00. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Please check out my Blog at: http://tedseifriedfutures.com/

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=Seifried

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

USDA Puts Grains on the Defensive

Dec 11, 2012

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.   

The December USDA report this morning was slightly bullish for corn and soybeans and decidedly bearish for wheat.  On the release of the report corn and soybeans rallied while wheat pushed lower.  Soon after the pressure in wheat spilled over to corn and then soybeans dragging the grain complex lower.

For corn the USDA left the balance sheet unchanged from last month with ending stocks coming in at 647 million bushels.  This was initially seen as supportive because the trade was looking for an increase in projected stocks and it did not come.  It is widely believed that the USDA is currently overstating export demand and also possibly ethanol demand.  As the day wore on with the heavy pressure in wheat the corn began to come down as well.  Traders began to think that maybe the USDA is still going to lower demand and increase ending stocks on the January report and they are just taking another month to continue to gather data.  Based on the numbers from the short marketing season so far it seems that export demand could come down 60-100 million bushels if sales remain poor.  Ethanol could also be reduced 20-60 million bushels if weekly corn usage does not pick up from current levels.  Ethanol stocks remain well above last year suggesting little need for an uptick in production.  From a world perspective the USDA lowered Argentinean corn production very slightly by .5 million metric tons.  This was less then some expected.  On the other hand the USDA increased China's corn production by a whopping 8 million metric tons.  This is a huge increase and could help to explain why China has not been an active buyer of late.

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

Soybeans enjoyed a 10 million bushel decline in ending stocks to 130 million bushels.  The lower stocks figure was a result of a 10 million bushel increase in crush demand.  This came as a bit of a surprise as many traders were expecting the decline to come from increased export demand as exports have been strong in recent weeks.  Either way, with a tightening stocks number and an announcement of 2 cargoes sold to China this morning soybeans were able to stay relatively firm despite the weakness in wheat and corn.  We do have to wonder if it is a bad sign that soybeans posted a lower close on what was supposed to be a bullish report.  Soybeans have rallied over $1.20 off of lows in the last month on ideas of stronger demand so much of this report may have already been factored into the market.  This could be a little of the buy the rumor sell the fact type trade.  This leaves us with the question - was this report bullish enough to justify an new leg higher in this soybean rally?  With strong resistance overhead soybeans will need to see continued strong export sales and maybe throw in a little more weather concerns for the South America crop.  The USDA did not lower production estimates for Brazil or Argentina as some thought they might after some late planting due to wet conditions.  If South American weather stays in a beneficial El Nino pattern there could be mounting pressure on the soybeans.

Wheat had the most dramatic report of the lot with the USDA increasing ending stocks by 50 million bushels.  The trade expectations were for a modest increase of 14 million.  So, the large increase came as a surprise.  The USDA also increased the world ending stocks by 2.8 million metric tons.  The continued drought conditions in the plains and talked of banning wheat exports in Russia and Argentina are bullish aspects of the market however, global demand seems to be waning and ending stocks remain large.

Sign up for our Morning Ag Comments: http://www.zaner.com/offers/?page=17

If all goes well in South America the global export market will be flooded with cheaper SA soybeans.  With corn demand being as poor as it is corn could also need to lower prices to buy some demand.  You have to wonder where corn and wheat would be if it were not for the strength in soybeans and what would happen if the soybeans reverted back to a bear market. 

March Corn Daily chart:

January 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 above $7.00 and soybeans near $15.00. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Please check out my Blog at: http://tedseifriedfutures.com/

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=Seifried

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 Soybeans?

Dec 06, 2012

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.   

In less then a month soybeans have rallied almost $1.20 a bushel from the lows.  Is this a new bull trend, or is this a technical correction in a bear market?  Today soybeans traded both sides of unchanged ending the day with a rally to new recent highs.  Export sales this morning were terrible once again for corn, average for wheat and really good for soybeans.  At first soybeans had more of a "buy the rumor sell the fact" type reaction to the stellar export numbers as much of the strength in soybeans so far this week has come from ideas of China buying.  But, in true bull market form the selling gave way to bullish enthusiasm and right back up we went.  So should we expect soybean prices to continue to make gains?

Well, it sure is great to see big numbers for soybeans on the export sales report.  And this type of action could continue for a while, but eventually South America will take over and likely price US soybeans out of the global picture.  South America sure has had some weather issues of their own with excessive rains causing planting delays.  This has possibly extended the window of opportunity for US exports but it is rare to get an extended rally based on too wet conditions.  The fact of the matter is that South America will end up with record planted acreage and good subsoil moisture.  Their growing season is far from over and while it is certainly possible that it does not rain again for 3 months (remember our last summer?) it seems unlikely due to a beneficial El Nino pattern they have enjoyed thus far.

Sign up for our Morning Ag Comments: http://www.zaner.com/offers/?page=17

Technically soybeans needed a bounce off of lows as the market was in an extreme oversold condition back in the first half of November.  The short term trend recently changed to higher as the 9-day moving average crossed over the 20-day, but the long term trend is still down as both the 9 and 20-day moving averages are below the 50-day.  The bounce has been impressive and thus far represents a 27% retracement of the move from September highs to November lows.  But soybeans now face a tough challenge of besting the 50-day moving average which is just 8 cents higher.  There is also psychological resistance at the $15.00 mark and the fibonacci 33% level near $15.20.  The chart formation must also be a concern for the bull camp at there is no classic bottoming formation in place, i.e no double bottom, inverted head and shoulders, 3 on the line and so fourth.  It is fairly rare to get an extended rally on a v bottom formation.

It is certainly possible for soybeans to continue to push higher in the near term but we are now quickly approaching strong levels of resistance that soybeans will have to shatter to extend the rally and change the long term trend.  Strong exports will help if sales continue at higher prices.  However as prices go up at some point global end users like China may decide to wait to make bigger purchases until they have access to cheaper South American soybeans.  This largely depends on good South American weather.  Ultimately with a weak basing formation and strong overhead resistance it may take a big South American weather scare to keep soybeans in bull mode.

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

If all goes well in South America the global export market will be flooded with cheaper SA soybeans come March - April.  With corn demand being as poor as it is corn could also need to lower prices to buy some demand.  You have to wonder where corn and wheat would be if it were not for the strength in soybeans and what would happen if the soybeans reverted back to a bear market. 

March Corn Daily chart:

January 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 above $7.00 and soybeans near $15.00. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Please check out my Blog at: http://tedseifriedfutures.com/

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=Seifried

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

Grains Holding Support For Now

Dec 04, 2012

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.   

Last week corn and wheat failed to break key resistance at their respective 100-day moving averages and early this week have come down to test support.  For now key support levels are holding in corn, wheat and soybeans.  However, spreads in the grains were showing a bear market mentality even as markets bounced off lows.  This could be an indicator of a better test of support on the way and maybe even more downside potential to follow.

Technically corn is stuck in a range between key support at the 20-day moving average (744) and key resistance at the 100-day moving average (769).  At some point, and I think relatively soon, corn will break out in one direction or another.  Export, ethanol and feed demand for corn are very poor at this time which could hint at lower prices.  After all, it is difficult to get excited about a tight supply when there is no demand.  But demand may need to be sparked in a different way.  It certainly could be the case that the threat of higher prices works better to encourage buying then lower prices.

Sign up for our Morning Ag Comments: http://www.zaner.com/offers/?page=17

Soybeans are technically still in a downtrend and attempting to follow through on what is for now a technical bounce.  Soybeans have a long way to go to turn the trend to up.  There was need to alleviate the oversold condition of the market.  Fundamentally soybeans have another 2-3 months to enjoy strong export demand.  South America has the potential for a massive crop and it that comes to fruition then US soybeans will not be competitive in the global market at these prices.

Wheat has a bit of a bullish weather market going on here in the US.  However, the chart looks sloppy and sideways.  The weather situation certainly needs to be watched but prices will likely follow corn and soybeans.

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

Outside markets continue to be a factor.  It seems markets move whenever anybody farts in Washington.  I feel that the fiscal cliff will get resolved and that although markets may embrace that at first glance the hard truth of the matter is that we will have had to give up much too much to make it happen.  Either way the economy gets hurt and in my mind its really just a question of how bad.

March Corn Daily chart:

January 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 new crop corn above $7.00 and new crop soybeans above $15.00. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Please check out my Blog at: http://tedseifriedfutures.com/

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=Seifried

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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