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May 2012 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.

July Soybean Daily Numbers & Trade Ideas for 5/22/12

May 23, 2012

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This report was sent to subscribers on 5/21/12 3:00 p.m. Chicago time to be used for trading on 5/22/12.

July Soybeans

After the close recap on 5/22/12: My resistance was 14.28, .10 1/4 from the actual high, and my support was 13.76, .01 from the actual low.

All charts and numbers for 5/23/12 have already been sent to subscribers at 2.50 pm.

July Soybeans


14.38 ¾
14.28
--------------14.07 Pivot
13.86 ¼
13.76 Low in May

5 day chart... Up from last week same day
Daily chart .... Sideways
Weekly chart ... Up
Monthly chart Up 13.07 is the 200 DMA
ATR 29 ¾ Balanced 42%

For 5/22/12: I still say "Last week's low is support, downtrend line is pivotal now, and the daily numbers resists".

In my daily soybean numbers on Monday; my pivot acted as resistance and was .03 ¾ from the actual high, my support was .05 from the actual low.

5/22/12:

Grains: Spot on soybean numbers, spot on corn resistance and accurate support numbers. After July corn made a new high for the run, it closed lower on the day which bodes well for another down day to follow. It is hard for me to believe that we are at these price levels with crop conditions and early planting on track for record yields. Unless the yield is under 162 or 163 BPA, $4.50 should be realized by harvest.

I am glad that some of my producers did take advantage of the current price to roll from the short June to July calls, and also get more protection in the new crop. I am all for selling a call spread and buying a put spread, and since I am not bullish I would not ... Subscribe now!

November soybeans could not get past $13.20 the last 5 days, in spite of a quick $1 in wheat and $.54 corn rally. It did lose $.30 last week. This is the market with the best fundamentals versus corn, yet it has little to do with how the market is trading right now. Not knowing why the market is doing what it is doing is no problem for me, because I need not know the reason why, I just need to know what I am doing and why.

Some of my producers did sell some of their cash corn, and 2 had record basis today when they sold it. They are in SD, and if you look at the crop progress report, they have the best conditions in the country right now with 86% good to excellent, and ND beats them at 87%, I am not joking! These are the farmers with some of the toughest conditions and weather to contend with.

Soybeans were a little disappointing to me, even though we were up $.26 the November $13.20/$12.60 put spreads were only $.02 cheaper (also means the call spread only gained $.02), partly because the futures were at $13.14 and so it was still in the money.

Old crop soybean June calls should be rolled to July now, unless you think we can stay here or go higher before Friday. You have a lot more to lose on the July calls if the market comes down than what is left on the June.

I continue to say "I would trade the numbers without bias, but prefer to take the sell signals. I would risk $.04 in corn and $.06 in soybeans using a stop to protect any idea".

5/21/12:

Grains: Spot on grain numbers. Anyone could create a story based on fundamentals that are basically unknown, to justify their position. I have said time and again that the fundamentals are mostly unknown this year and are guesstimates, and have no value for participating in the market. I have warned of the market being volatile, making new lows (it did) and it would not surprise me to see it rally past my expectations, and then making new contract lows or highs by harvest. It all depends on the weather, and the price swings will be volatile because of the fund participation. Yes I want to sell rallies rather than buying the breaks, and I will continue to think that until there is a true concern with the weather affecting yields. This is one of the hardest years for the fundamentals to help me with price discovery, and so the shorter the time frame to trade in is better for me.

I do not know what the market will do, and I am surprised by the recent strength in corn and weakness in soybeans. I look at each market on its own chart merits, and try to take advantage of any rally or break. I do what is right for me when I do it, and do not look at what happens afterward to make what I did right or wrong.

July soybeans finished the week down $.01 which is a losing round for the bulls. It made a low of $13.76 on Monday, and a high of $14.49 ¾ on Thursday. On Friday it closed at $13.05. Is that volatile enough for you? That range could be the parameters for this week, but I think it is more likely that the low will be taken out before the resistance. After the market made a key reversal on 5/2 with a new high for the year and closed lower, the last 2 weeks posted lower highs and lower lows, and I see the same for this week too.

Outside of last week's parameters, July soybeans have support at $13.30, and that is about ½ ways for the entire move since January. Resistance is at $14.90 where the recapture of the uptrend line would be and now it acts as resistance.

November soybeans closed the week down $.33 ¼ and has support at last week's low of $12.82 ¼, and below there is $12.50 about ½ ways correction back down. It never got above $13.24 ¼ last week; but if it gets above there then nothing stops it until $13.68. November soybeans have posted a major "double top" the last 2 years at $14 and should be respected in all your decisions.

Who would have though July corn could close $.54 ½ higher for the week? July corn closed on a downtrend line which is now pivotal, and then the next resistance is major near the 200 day moving average at 6.59 ¾. This has been key resistance the last 6 months containing previous advances. All hedges in old crop will make more than their last morph above their put strike. Some have a few June corn calls yet to be rolled to July, and this is the last week to do so. This week you should really take advantage of the time decay and high prices to roll.

You might have only 3 more weeks to close out the old crop hedges to make cash sales and call it another windfall profit marketing year. The best time to sell the cash and get out of the hedge is when the market is ...Subscribe now! I would sell some cash now even if I thought the squeeze is yet to be seen. You might be right, I am starting to think there might not be as much corn as what the USDA says is being stored on farm and not required to be reported. It really does not matter to me, but perception drives markets temporarily, and I just try to take advantage of the price swings no matter the reason for the swings. Selling some cash and "banking" very good profits since the July puts were entered, is the prudent thing to do. It is also something to think about when you "finance" the hedges using options, if you look what the basis they wanted for the last 6 months for December 2012 corn, it makes what we pay for our protection and the right to still be long, look really cheap.

Since March 19th December corn has made lower highs and lower lows, and that pattern will be broken above $5.57. Until then, anything I can do to take advantage of the rally I want to do, and that includes just buying more put protection for even just $.30 or $.40 more coverage down to $4.60. The bulls have the "double bottom" at $5 the last 2 years providing a springboard to close $.31 ¾ higher for the week. There is a gap yet to be filled at $5.43 ¼ and until that is filled that will be good resistance and my first resistance for Monday. The major downtrend line is $5.55 and worth selling, and if that goes we have resistance $.20 and $.30 above there. I would think it cannot get above the downtrend line unless the weather forecast is calling for hot dry weather. Support should be found ½ ways down to the $4.99 low.

As soon as they have the fundamentalists convinced that buying beans and selling corn is the way to go, soybeans close $.33 ½ lower and corn $.10 ½ higher on Friday alone. This is not the only year or time I have no idea what is going on but manage to trade just as well as when I think I know what the actual fundamental picture is.

After the close we might get the first crop conditions in the crop report, but whatever it says will be discounted if problematic hot/dry weather is in the forecast. I continue to say (on Friday it worked well for soybeans, but not for corn) "I would trade the numbers without bias, but prefer to take the sell signals. I would risk $.04 in corn and $.06 in soybeans using a stop to protect any idea".

5/18/12:

Grains: Spot on soybean numbers and accurate corn numbers. Markets as always can and will do anything. My job as a trader and your job marketing your grain are to take advantage of the price swings in order to make money. You can see how July corn has rallied and stopped exactly at the downtrend line resistance. If above it will become support, but below it is resistance and a good place to go short or take profits if long. July soybeans could be forming the right shoulder of a head and shoulders top if $14.50 contains rallies the next 2 weeks.

Any rally in December corn to its downtrend line at $5.40 should be taken advantage of by extending all current protection down to $4.60 ($4.54 major support). $5.55 is the major downtrend line and if above there the bulls would be in control, and I would take profits (from time decay) buying back some of my short call spreads then. I want to take advantage of the current corrective bounce by buying the $5/$4.60 put spread that settled at $.14 1/8. I can pay for it by ...Subscribe now!

The closer we get to next Friday, the more you should roll from the June to the July calls. The money (premium) should start to come out of the June calls in a big way today. Here is another chance to reflect your bullishness or bearishness by the strike prices you decide to sell. Do not let the market go down to a point where the June calls will lose a little because there is nothing left versus what is still on the July to lose. The higher the market the more you will get for the July calls versus the June. The lower we go the less you will get.

I would just "man up" and get more protection in November soybeans. Deep pockets and bearish then you could ...Subscribe now! This is really your decision, your risk, your reward, and your money. This is your way of trading, these are the times to "gamble" or not, or limit your risk. This is much more controlled than being unhedged, much less risk, and many more opportunities than just the one time "sale" that could be a long time coming.

"I would trade the numbers without bias, but prefer to take the sell signals. I would risk $.04 in corn and $.06 in soybeans using a stop to protect any idea".

 

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WASDE Report 5/10/12

May 10, 2012

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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 36 years.

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WASDE Report for 5/10/12

OILSEEDS:  U.S. oilseed production for 2012/13 is projected at 97.0 million tons, up 6 percent from 2011/12. Higher soybean production accounts for most of the increase, but sunflowerseed, canola, peanut, and cottonseed production also are all projected above last year. Soybean production is projected at 3.205 billion bushels, up from the 2011 crop as higher yields more than offset lower harvested area. Harvested area is projected at 73.0 million acres based on a 5-year average harvested-to-planted ratio and planted area of 73.9 million acres. Soybean yields are projected at 43.9 bushels per acre, up 2.4 bushels from 2011. With beginning stocks projected at 210 million bushels, 2012/13 soybean supplies are projected at 3.43 billion bushels, up 4 percent from 2011/12.

U.S. soybean crush for 2012/13 is projected at 1.655 billion bushels, almost unchanged from 2011/12 as a lower extraction rate offsets reduced total soybean meal use. Total soybean meal use is projected down 1 percent as reduced exports are only partly offset by gains in domestic use. Increased soybean meal exports from Paraguay and Argentina are expected to exceed the limited gains in global import demand, resulting in reduced U.S. export prospects. With increased 2012/13 U.S. soybean supplies and sharply lower South American soybean supplies on hand this fall, U.S. soybean exports are projected at 1.505 billion bushels, up 190 million from 2011/12. Ending stocks for 2012/13 are projected at 145 million bushels, down 65 million from 2011/12, leaving the stocks-to-use ratio at a historically low 4.4 percent. The U.S. season-average soybean price for 2012/13 is projected at $12.00 to $14.00 per bushel compared with $12.35 per bushel in 2011/12. Soybean meal prices are forecast at $335 to $365 per short ton, compared with $360. Soybean oil prices are projected at 52.5 to 56.5 cents per pound compared with 53.5 cents for 2011/12.

Global oilseed production for 2012/13 is projected at a record 471.5 million tons, up 8 percent from 2011/12 mainly due to increased soybean production. Global soybean production is projected at 271.4 million tons, up almost 15 percent. The Argentina soybean crop is projected at 55 million tons, up 12.5 million from 2011/12 as yields rebound and relatively high prices lead to record harvested area. The Brazil soybean crop is projected at a record 78 million tons, up 13 million, also due to record harvested area and improved yields. Paraguay soybean production is projected at 7.8 million tons, up 3.8 million from 2011/12 as yields rebound strongly from drought-reduced levels. China soybean production is projected at 13.1 million tons, down 0.4 million from 2011/12 as producers continue to shift area to more profitable crops. Global production of high-oil content seeds (sunflowerseed and rapeseed) is projected almost unchanged from 2011/12 as increased area is mostly offset by lower yields. Oilseed supplies for 2012/13 are up 3 percent from 2011/12 despite a 23 percent reduction in beginning stocks resulting from drought-reduced South American crops. With crush projected to increase 2.9 percent, 2012/13 global oilseed ending stocks are projected at 65.6 million tons, up 2.9 million from 2011/12, but still 15.8 million below 2010/11.

Global protein meal consumption is projected to increase 2.8 percent in 2012/13. Protein meal consumption is projected to increase 5 percent in China, accounting for about half of global protein consumption gains. Global soybean exports are projected at 97.3 million tons, up 9 percent from 2011/12. China soybean imports are projected at 61 million tons, up 5 million from 2011/12. Global vegetable oil consumption is projected to increase 3.2 percent in 2012/13, led by increases for China and India.


WHEAT: The 2012/13 outlook for U.S. wheat is for larger supplies and use, but lower prices. All wheat production is projected at 2,245 million bushels, up 12 percent from last year's weather-reduced crop and the highest since 2008/09. The all wheat yield, projected at 45.7 bushels per acre, is up 2.0 bushels from last year, but 0.6 bushels below the 2010/11 level. The survey-based forecast for 2012/13 winter wheat production is up 13 percent with a forecast record yield of 47.6 bushels per acre as a recovery in yields in the southern and central Plains boost Hard Red Winter (HRW) wheat production sharply from the previous year. Partly offsetting is lower forecast production for Soft Red Winter wheat and White Wheat compared with last year. Spring wheat production for 2012/13 is expected to rebound with a recovery in durum area and higher projected yields for other spring wheat, which are expected to offset the decline in other spring area. U.S. wheat supplies for 2012/13 are projected at 3,133 million bushels, up 5 percent from 2011/12.

Total U.S. wheat use for 2012/13 is projected up 8 percent year-to-year on higher expected domestic use and exports. Food use is projected at 945 million bushels, up 15 million from 2011/12 as flour extraction rates are expected to decline modestly from historical highs in recent years and consumption grows with population. Feed and residual use is projected at 230 million bushels, up 50 million from the 2011/12 projection as favorable wheat prices relative to corn and larger HRW supplies boost summer quarter wheat feed and residual disappearance. U.S. exports for 2012/13 are projected at 1,150 million bushels, up 125 million from this month's 25-million-bushel higher projection for 2011/12. Larger supplies, more competitive prices, and an early expected start to this year's harvest open the door to higher demand for U.S. wheat during the coming months. U.S. ending stocks are projected to continue their decline from the recent high in 2009/10. At a projected 735 million bushels, 2012/13 ending stocks are expected down 33 million from 2011/12 and 241 million below 2009/10. The season-average farm price for all wheat is projected at $5.50 to $6.70 per bushel, down sharply from the record $7.25 per bushel projected for 2011/12.

Global wheat supplies for 2012/13 are projected 2 percent lower on the year as a 23.8-million-ton reduction in foreign production offsets the increase in U.S. output. At the projected 677.6 million tons, global production is down 17.1 million from 2011/12. Lower 2012/13 production for FSU-12, EU-27, Australia, Morocco, Argentina, Turkey, and Pakistan accounts for most of the reduction. Record production for India and China and larger crops in Canada, Afghanistan, Algeria, and Iran limit the decline.

Global wheat trade for 2012/13 is expected to be lower than in 2011/12 with world imports projected down 6.1 million tons to 135.3 million. Some of the largest reductions are for EU-27, South Korea, Mexico, Japan, the Philippines, and Saudi Arabia where wheat feeding is also reduced. Exports are reduced for FSU-12, Argentina, EU-27, Australia, and Brazil, but raised for Canada. Global wheat feeding is lowered 13.9 million tons from 2011/12 with lower expected supplies of feed-quality wheat and record projected coarse grain supplies. Global wheat consumption is projected down 7.9 million tons or 1 percent from 2011/12 as small increases in food use in most countries partly offset the decline in global wheat feeding. Global ending stocks for 2012/13 are projected at 188.1 million tons, down 8.9 million on the year. Stocks are expected to remain sharply higher than the recent low of 125.6 million tons in 2007/08.

COARSE GRAINS:  U.S. feed grain supplies for 2012/13 are projected at a record 416.3 million tons, up 16 percent from 2011/12 with higher area and production for corn, sorghum, barley, and oats. Corn production for 2012/13 is projected at a record 14.8 billion bushels, up 2.4 billion from 2011/12. A projected 5.1-million-acre increase in harvested area and higher expected yields, compared with 2011/12, sharply boost production prospects. The 2012/13 corn yield is projected at a record 166.0 bushels per acre, 2.0 bushels above the 1990-2010 trend reflecting the rapid pace of planting and emergence. Despite the lowest expected carryin in 16 years, corn supplies for 2012/13 are projected at a record 15.7 billion bushels, up 2.2 billion from 2011/12.

Total U.S. corn use for 2012/13 is projected up 9 percent from 2011/12 on higher feed and residual disappearance, increased use for sweeteners and starch, and larger exports. Feed and residual use for 2012/13 is projected up 900 million bushels reflecting a sharp rebound in residual disappearance with the record crop and an increase in feeding with lower corn prices and higher expected pork and poultry production. Projected corn use for ethanol is unchanged on the year as weak gasoline consumption limits domestic blending opportunities. Corn exports for 2012/13 are projected 200 million bushels higher than in 2011/12 on abundant domestic supplies, lower prices, and higher expected China demand. Record foreign corn supplies, however, are expected to limit the increase in U.S. shipments. U.S. corn ending stocks for 2012/13 are projected at 1.9 billion bushels, up 1.0 billion bushels from the current year projection. The season-average farm price is projected at $4.20 to $5.00 per bushel, down sharply from the 2011/12 record projected at $5.95 to $6.25 per bushel.

Projected corn ending stocks for 2011/12 are raised 50 million bushels to 851 million with lower expected June-August feed and residual disappearance. The large year-to-year increase in winter wheat production and attractive prices for wheat relative to corn are expected to raise summer wheat feeding. Record mid-April corn plantings and early May crop emergence boost prospects for early 2012-crop corn usage before the September 1 beginning of the 2012/13 marketing year. As in recent years, this late-summer new-crop usage is expected to displace old-crop usage and boost carryout.

Global coarse grain supplies for 2012/13 are projected at a record 1,389.2 million tons, up 6 percent from 2011/12. Global corn production for 2012/13 is projected at a record 945.8 million tons, up 75.3 million from 2011/12, and the 6th straight year that world corn output has set a new record. Foreign corn production is also projected to be a record at 570.1 million tons, up 13.6 million with the largest increases for Argentina, Mexico, Canada, South Africa, China, and Ukraine. Global corn trade is projected higher for 2012/13 with imports raised 6 percent mostly supporting higher corn feeding in China, Vietnam, South Korea, Japan, EU-27, and the Middle East. Global corn food, seed, and industrial use is also raised with increases in corn processing expected for China, Argentina, EU-27, and Brazil. Global corn consumption is projected at a record 921.0 million tons, up 53.7 million from 2011/12 with more than half of the increase in foreign markets. World corn ending stocks for 2012/13 are projected at 152.3 million tons, up 24.8 million from 2011/12, and the highest since 2000/01.


SUGAR:  Projected U.S. sugar supply for fiscal year 2012/13 is down 2.4 percent from 2011/12, as lower imports more than offset higher production and beginning stocks. Higher beet sugar production reflects higher area and trend yields, while cane sugar production is nearly unchanged from a year earlier. Imports under the tariff rate quota (TRQ) reflect the minimum of U.S. commitments to import raw and refined sugar and projected shortfall. The Secretary will establish the TRQ at a later date. Imports from Mexico are up mainly due to higher production in Mexico. Total use is up 1 percent.

For 2011/12, U.S. sugar supplies are increased 978,000 short tons, raw value, from last month. Beet sugar production is increased to reflect higher-than-normal early harvest of sugarbeets, while the increase in Florida cane sugar matches processor projections. Higher imports reflect the announced increase in the U.S. TRQ and higher imports from Mexico. Mexico's sugar exports are increased following reductions in domestic use and ending stocks.

LIVESTOCK, POULTRY, AND DAIRY:  Total U.S. meat production in 2013 is projected to be above 2012 as higher pork and poultry production more than offsets continued declines in beef production. Lower forecast feed costs and relatively strong, albeit declining hog, broiler, and turkey prices are expected to provide incentives for continued pork and poultry expansion. Pork production is expected to increase at about the same rate as 2012 as producers increase farrowings modestly, but the number of pigs per litter continues to grow. Broiler and turkey production for 2013 are also forecast higher as producers benefit from lower feed costs; however, increasing production will weigh on broiler and turkey prices, moderating the rate of expansion. Beef production will decline in 2013 due to tighter supplies of fed cattle and lower cow slaughter. Egg production is expected to decline in 2013 as producer returns in 2012 are affected by sharply lower egg prices.

The total meat production forecast for 2012 is raised from last month as production of beef, pork, broiler, and turkey is forecast higher. Beef production is raised on heavier carcass weights and larger expected cow slaughter. Pork production is raised fractionally on slightly heavier carcass weights. Broiler and turkey production forecasts for 2012 are raised on first-quarter production data; production forecasts for subsequent quarters are unchanged. Egg production is forecast higher, largely due to higher first-quarter production.

Tight U.S. beef supplies and high cattle prices are expected to constrain beef exports in 2013. Pork exports are expected to gain in 2013 as supplies increase and hog prices decline. Broiler exports are forecast lower in the face of improving domestic demand. Beef imports are expected to be higher in 2012 as U.S. cow slaughter declines in response to reduced cow inventories and increased retention. Pork imports are forecast unchanged from 2012.

The beef export forecast for 2012 is reduced from last month on expected weaker first-quarter exports. Forecasts for subsequent quarters are unchanged. The pork export forecast is raised marginally as stronger expected first-quarter exports more than offset a slightly weaker forecast for the second half of the year. Broiler exports are raised on higher expected first-quarter shipments.

For 2013, cattle prices are forecast above 2012 due to tight supplies of fed cattle. Hog, broiler, and turkey prices are forecast to decline from 2012 as production increases for all three meats. Egg prices are forecast higher on lower production.

The cattle price forecast for 2012 is reduced from last month based on recent declines in cattle prices. The hog price forecast is reduced on weaker pork demand. Broiler prices are reduced, but turkey and egg prices are forecast higher.

Milk production for 2013 is forecast to increase slightly. High feed prices and weakening milk prices during 2012 are expected to pressure producer returns, leading to declines in 2013 cow numbers. However, improvements in returns during 2013 will moderate the rate of decline. Milk per cow is expected to continue to grow, supporting increased milk production. Commercial exports are forecast to increase as the global economy improves and milk production increases. Imports will be slightly lower as domestic supplies increase. With improving demand and only modest increases in production, cheese, butter, and nonfat dry milk (NDM) prices are forecast higher. Whey prices will average near 2012 levels. Both Class III and Class IV prices are forecast higher, and the all milk price is forecast at $17.25 to $18.25 per cwt for 2013.

Forecast milk production in 2012 is raised from last month, primarily reflecting a slower decline in cow numbers and slightly faster growth in milk per cow. Cheese, butter, and NDM prices are reduced from last month on weaker-than-expected demand but whey demand has been stronger than expected and the price forecast has been raised. Class price forecasts are reduced. The milk price is forecast to average $16.90 to $17.40 per cwt.

COTTON:  The U.S. cotton projections for 2012/13 include higher supply, demand, and ending stocks compared with 2011/12. Projected production is raised 9 percent based on Prospective Plantings and average yields. Above-average abandonment is projected at 20 percent due to continued drought on the Texas High Plains. Domestic mill use is projected at 3.5 million bales, 100,000 bales above 2011/12. Exports are projected at 12.0 million bales, 5 percent above last season due to the larger available supplies. Ending stocks are raised to 4.9 million bales. The projected stocks-to-use ratio of 32 percent is well above the last three seasons, but only slightly above the 10-year average of 30 percent. The forecast range for the marketing-year average price received by producers is 65 to 85 cents per pound, compared with 91.0 cents estimated for 2011/12.

The initial 2012/13 world cotton projections show record world ending stocks for the second consecutive season, resulting from an expected 6.7-million bale surplus of production over consumption. World production is projected 5 percent lower than last season at 116.7 million bales, with reductions predicted for nearly all major cotton-producing countries except the United States. World consumption is expected to rise 3.3 percent due to modest growth in both world GDP and cotton's share of world fiber demand, as lower cotton prices relative to polyester improve cotton's competitive position. World trade is expected to fall 10 percent, as sharply lower imports by China are partially offset by increases for other countries where cotton demand is projected to rise.

China's national reserve stocks are currently estimated at nearly 20.0 million bales. The government of China has announced a 2012/13 support price above both the 2011/12 support price and the anticipated world price; therefore, the reserve is likely to acquire a significant proportion of the 2012 crop. China's government has not indicated how it will manage the expected deficit in production relative to consumption. The China 2012/13 import projection of 14.0 million bales is based on USDA's assumption that China will limit the growth of national reserve stocks by releasing a portion of the reserve. China's total ending stocks are expected to grow 14 percent to 28 million bales, representing 38 percent of total world stocks.

RICE:  Tighter U.S. 2012/13 all rice ending stocks, forecast down 21 percent from 2011/12 are expected to result in higher rice prices. U.S. 2012/13 all rice supplies are forecast at 239.0 million cwt, down 6 percent from 2011/12. Beginning stocks and production in 2012/13 are both forecast lower from a year ago, while imports are forecast 7 percent larger. Beginning stocks, at 34.0 million cwt, are down 30 percent from 2011/12. U.S. rice production in 2012/13 is projected at 183.0 million cwt, down 1 percent from 2011/12. Planted area in 2012 is forecast at 2.56 million acres, down 5 percent from the previous year and the smallest area since 1987/88. Harvested area is estimated at 2.53 million acres. Average all rice yield is projected at a record 7,225 pounds per acre, up 2 percent from the previous year's crop. The projected yield is estimated based on a linear trend by rice class, 1990/91-2011/12.

U.S. 2012/13 total all rice use is projected at a 212.0 million cwt, 4 percent below the previous year. U.S. domestic and residual use is projected at 123.0 million cwt, the same as 2011/12. The use of rice in beer brewing has trended down in recent years and contributed to a near stagnant per capita consumption of rice. Exports are projected at 89.0 million cwt, 8 percent below revised 2011/12 exports. Despite an expected increase in global trade, competition for key markets will be keen as competitor supplies rise, particularly in Asia. U.S. all rice ending stocks in 2012/13 are projected at 27.0 million cwt, 21 percent below the previous year with a stocks-to-use ratio of 12.7 percent-the lowest since 2007/08. The average milling yield used for 2012/13 is 70.25 percent based on the 2007/08-2011/12 average rates.

The U.S. 2012/13 long-grain rice season-average farm price is projected at $14.50 to $15.50 per cwt, compared to a revised $13.20 to $13.60 for the previous year. The combined medium- and short-grain price is projected at $17.25 to $18.25 per cwt, compared to $15.50 to $15.90 for a year earlier. The 2012/13 all rice price is projected at $15.30 to $16.30 per cwt, compared to a revised $13.90 to $14.30 per cwt for 2011/12. U.S. prices are expected to strengthen on a forecast tighter domestic supply situation for both long-grain and combined medium- and short-grain rice, despite an expected record global rice crop, particularly among the major Asia exporters.

Global 2012/13 total supply and use are each projected to reach record levels at 570.6 and 465.7 million tons, respectively, resulting in a 0.7- million increase in world ending stocks. Global 2012/13 rice production is projected at a record 466.4 million tons, up 3.1 million from 2011/12. Record rice crops are projected in Asia. In contrast, rice crops in Western Hemisphere exporters are forecast lower than the previous year as producers switch to more profitable crops. In contrast, Brazil's rice production is forecast to expand in 2012/13 from the previous year's weather-reduced crop. Global 2012/13 consumption is projected at a record 465.7 million tons, up nearly 2 percent from the previous year. Global exports in 2012/13 are projected at a marketing-year record of 35.1 million tons, up 1.1 million from 2011/12. Large imports are projected for Nigeria, Iran, the EU-27, and Indonesia. Global ending stocks are expected to increase 0.7 million tons to 104.9 million.

Note: The rice supply and use series for Cambodia and Laos have been revised back to 2005/06 and 1999/2000, respectively, to more accurately reflect reported per capita consumption, trade, and to incorporate ending stocks estimates. Cambodia and Laos rice production estimates for 2011/12 are 4.3 million and 1.4 million tons, respectively, down 1.1 and 0.5 million from the April WASDE report, and deviate from official Cambodia and Laos published estimates.

Note: The rice supply and use series for Cambodia and Laos have been revised back to 2005/06 and 1999/2000, respectively, to more accurately reflect reported per capita consumption, trade, and to incorporate ending stocks estimates. Cambodia and Laos rice production estimates for 2011/12 are 4.3 million and 1.4 million tons, respectively, down 1.1 and 0.5 million from the April WASDE report, and deviate from official Cambodia and Laos published estimates.

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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 Soybean Daily Numbers & Trade Ideas for 5/3/12

May 04, 2012

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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 36 years.

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This report was sent to subscribers on 5/2/12 3:30 p.m. Chicago time to be used for trading on 4/25/12.

May Soybeans

After the close recap on 5/3/12: My pivot acted as resistance and was 14.80 1/2, .02 1/4 (.01 1/2 in open outcry), my support was 14.61 which was the exact actual low.


May Soybeans

15.09 2012 High
15.00
--------------14.80 ½ Pivot
14.61
14.40 Uptrend Line Support
14.33 ¾

5 day chart... Up from last week same day
Daily chart .... Up
Weekly chart ... Up
Monthly chart Up 12.97 ½ is the 200 DMA
ATR 26 ½ Balanced 69%

I still say "Top channel line is resistance, uptrend line supports". This July chart looks like the May contract. I always get my numbers from the "spot month" because that contract has the most real players especially in the delivery period. It has always been the most accurate for me.

During the day, I can use the basis between May and July and just add (or subtract) from the May numbers to get the July numbers.

In my daily soybean numbers on Wednesday; my resistance was .00 ¾ from the actual high, my support was .02 ¼ from the actual low.

5/3/12:

Grains: Spot on grain numbers. I will say you had plenty of time to sell the pivots. Soybeans sold off from its pivot, but eventually rallied to the first resistance and failed there. It was easy to sell against the resistance number. My concern with the lofty market prices was sustainability, but corn prices unable to hurdle the resistance levels for quite some time are an easier sell to me.

July soybeans went to the top channel line (resistance) and sold off from there. $14.50 is where the uptrend line is and should support for now. July soybeans did make a new high for the run (May did not) and closed lower which bodes well for another down day to follow on Thursday. November soybeans closed about $.05 above its uptrend line support.

May/July corn spread closed at $.30 ¾ which is almost double the record carry seen in March. Stay away from that spread. Many will read the meaning of that as fewer stocks than the USDA is telling us, but in reality it looks like a simple short squeeze. Longs have the money to take delivery of whatever can be delivered, but the shorts do not have it and cannot deliver, thus having to pay whatever the bulls are asking.

December corn closed $.08 from the low of the year made in April, and the downtrend line comes in just above the high this week continuing to contain any rally. The big question is if we can once again hold these levels, or if buying more protection is the thing to do. I think all of my producers have crop insurance, so each producer has to factor that in their hedges. I have been urging lately to make sure you have protection down to $5. Let's take a look at some things that could be done to reflect your mindset.

Another thing to think about is with your crop protection, you could leave some of the upside here, and just buy something like the $5.10/$4.60 put spread which settled at $.18 5/8. Then selling that call spread above does not stop you from having the upside at $5.10 to the $5.40 put, where your protection ends. $.18 5/8 minus $.07 1/8 from the call spread sold, costs $.12 ½ including commissions. That gives you $.50 protection cheaply. If we rally you could then fill in the missing put protection from $5.10 to $5.40.

Pick your strikes, have the upside you want, protect the downside, and use the strikes and strategy that reflects YOUR decision. Since we had some kind of a break, I would trade the numbers without bias and risk $.04 in corn and $.06 in soybeans using a stop to protect any idea.


5/2/12:

Grains: Almost exact grain numbers. First thing I see is that May soybeans gapped lower on Monday night, with my pivot being right on the high and able to take the sell signal using a buy stop to protect. Early in the morning the market went to my support and a place to take profits at my first support at $14.87 making $.13 (or whatever you would have). Bulls could have bought there. In open outcry the market rallied from near there to the pivot once again and was unable to get through there. Again, it was another chance to sell the gap resistance strongly, with maybe 5 or 10 contracts. Market then went down to my first support once again providing profit taking and another chance for the bulls and a bear like me to buy a contract or 2 knowing the next support was not far underneath. 45 minutes before the close in open outcry the market rallied back to the pivot resistance within a $.01 once again providing another profit taking and place to get short a few contracts. By the close the market went down $.10 providing more income.

Not every day trades like this, I would think at least 3 times a month, but 1 day like this makes my month. It does not matter if the market is one like when corn is at $3 and the average range is $.07, the market rotates like this many days out of the week, or month. Nothing fundamentally changed in that time period or 3:45 hours of open outcry except the price, and the price is what we make money on, never the fundamentals.

So we gapped lower once again tonight (2nd day in a row), we are near $15, and you should already know what I want to do and what I would say. You are correct; I want to sell against the gap using a stop just above it. If I was still bullish I would sell only 1 contract, or none at all, and that is my way of being long having no position at all. I would never cheerlead it through 2 gaps at $15. Can it break through and go to $16? Sure, but I would not bet on it, the odds do not favor for me to think that the market can get above $15.09. I said this at $12, $13, $14, but looking back you will see many sell signals for day trades that worked more times than not. Risking less than willing to make adds to my "casino odds" and warrants continuing the bet every time. Selling at $15 is not like selling at $12, it gets easier for me. The key is to use stops, and allocate funds that are no different than any other day or price. I take my bias and chart location, and allocate funds on my ideas. The pendulum could keep swinging higher for another month or two, but good weather and in time, the pendulum will make just as big swing the other way.

This has been one of the most historic soybean rallies that I have ever seen. I took out bites and chucks of every $1 it rallied, and my service keeps raising their protection to where they have captured at least 65% of every $1 and they did not need to be a bull or bear to have done so. Everyone has such good hedge locations, that only a few contracts have been morphed in the last 7 trading days. This is the closest I get to a vacation.

May corn made a new high for the run and closed lower which bodes well for another down day to follow on Wednesday. Not only was it $.00 ¼ from my first resistance which was the April high, and knowing this could be the high for May too, I would have sold corn with BOTH hands. It was late in the day, but 25 minutes later it went down $.09 ½ which was enough to make more than the $.04 that was risked. I would have covered most of them for a $.06 profit, the rest for more on the close. Little gap lower tonight makes me want to sell the market again, and not only for a day trade but for a longer term trade idea. I would use a $6.67 ¼ buy stop for that. Using a known risk strategy I would be looking for a retest of $6. This equates for producers to roll up old and new crop puts as high as possible if any are left to be done.

I want to take the sell signals only and risk $.04 in corn and $.06 in soybeans using a stop to protect any idea.

5/1/12:

Grains: Spot on grain numbers. $15 soybeans and the market seem to be not at all jittery about it, but I am. Bull chart is not in question, bulls remain in control above $14, and there is no reason to not go higher. But I know well that sustainability above $14 let alone $15 has never been accomplished. I know there is a first time for everything, but the odds are in my favor that they will not. Playing the short side is the only known risk strategy I can do at these levels. The allocated funds are a known risk, and the times that it will lose on the idea, will be much less than the reward. I want to roll up any November put spread, and would consider converting the old crop option strategy to a futures contract and calling it quits if they rally, and consider putting on the option strategy once again near $14. I had some who did roll from a future to an option strategy so they can go after more money by selling calls for more than they paid for the put spreads, and getting a chance for at least $.30 more upside above the put spreads bought and the calls that were sold. I always tell you that you are in control, it is your money, and now you have the strategy that will best be able to reflect your thoughts.

Crop progress reported corn planting at 53% which was more than even what I expected. IL planted 79% and IN 70% is amazing and I thought maybe 50% was possible. IA went from 9% last week to 50% complete this week, an amazing feat. I know my producers out there put in 140+ acres a day between rainfalls. All my producers are that efficient, go back 20 or 30 years ago and this was not thought possible even by 2012. Soybeans progress was 12% planted and that was on time.

Corn is probably looking at the price of soybeans and think there must be some upside left for them, or the trade is trading off of old crop demand rather than the big crop I see coming on near ideal conditions. If that is the case, I am glad they are looking at the "OZ" of the here and now, rather than the "man behind the screen" which will eventually expose a tremendous crop as long as the favorable weather continues. If they were focused on what's coming in the future (which is what producers must do for their new crop), they would have a plan to $5 in the near term, and $4.50 to $4 by harvest. They would much rather see corn go to $6.30 (or higher so they can get more upside and lock in some of the gain by morphing). All my producers have the upside already open for further gain in their old crop corn hedges, and all have that in the December, but more concerned with protecting the downside. This is also a way of participating on the short term strength in the old crop, and holding off from buying more new crop protection. But time is running out with good weather, and I give us until the end of May before $5 or lower will be tested.

It is too early for me to roll out of the June corn calls; I need to wait until more premium is taken out. Only if you are bullish above your short calls should you roll on this rally.

Soybeans are difficult and risky, so I trade less in markets like that, and concentrate on markets with more known chart parameters. Day trading is always on the table for me, and I can have a bias but trade on both sides of the market more than once if the market gets to my numbers.

I would continue to trade without bias and risk $.04 in corn and $.06 in soybeans using a stop to protect any idea.

 

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

The 6 markets now covered daily are Soybeans, Corn, Crude oil, S&P, 30 yr TBond and Gold.

My numbers usually are sent at least 12 hours (via your email) in advance of the next day open outcry session. Subscribers use them as best suited to their own needs and sometimes that involves the overnight trade.

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

Howard Tyllas

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

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

Tel.1-312-573-2699, 1-312-823-9189

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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