Sep 1, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin


July 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.

Quiet Turn Around Tuesday

Jul 31, 2012

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.   

Corn and soybeans ended lower on a quiet, choppy, two-sided trade day while wheat closed sharply lower.  Wheat was under pressure all day due to Russia not banning exports.  And a non event Fed decision saw the grains rally briefly only to pull back to where they were before the announcement.

It seems the grains are taking a bit of a much needed break in the wild volatility.  However, it could also be said that the bullish momentum is waning.  Really, I think that with weather being mostly the same and the fact that we have a lot of new news coming this Friday through next Friday the grains (and grain traders) are just taking a bit of a breather here.

Options on Beans for People Who Don`t Know Beans About Options: http://www.zaner.com/offers/?page=8&ap=tseifrie

It will be very interesting to see what Informa has to say on their survey based estimates this Friday.  I get the feeling that there is a good chance that the computer model based estimate last Friday might have been a tad more bullish then what the surveys will uncover.  I have talked to clients in the eastern belt that a few weeks ago had all but given up on this years crops but are now looking at the possibility of a 130 yield for corn and 38-40 yield for beans.  At the same time yield outlooks for parts of the western belt are dropping, so it is tough to peg.

Even more interesting will be what the USDA has to say next Friday.  It seems certain that there will be another sizeable decline in yields, however I would also imagine that we could see a significant drop in demand based on current prices.  The question will be - does the resulting carry over justify these prices?

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

With high volatility in a weather market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 $7.70 and new crop soybeans above $16.00. 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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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 Still Under Pressure

Jul 26, 2012

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.   

Low volume trade and continued wild volatility ended in another sharply lower day for soybeans and lower day for corn.  To start the day export sales were pitiful, highlighting weaker demand at higher prices.  Soybean sales were just 7 million bushels and we managed to sell negative 400 thousand bushels of corn.  Speaking of selling, so far this week funds have sold 31,000 contracts of soybeans and 23,000 contracts of corn.

Tomorrow might offer some bullish fodder to spark a late week comeback.  Informa is set to offer up their latest production number and this one is based on their computer models and a poor forecast for August weather.  Informa weighs in again next Friday with their estimate based on farmer survey.  Most likely the numbers tomorrow will be the lower of the two.  The US Dollar and outside markets could start to lend support as well with the DOW up over 200 points and the US Dollar down over 70 points.  However, we didn't seem too impressed with that today.

Options on Beans for People Who Don`t Know Beans About Options: http://www.zaner.com/offers/?page=8&ap=tseifrie

What happened to the extreme bullishness we saw a week ago?  Have things changed so much in the last few days?  I don't believe they have, and I don't believe this is over yet.  However, it is important to note that we are finding very willing sellers at these price levels and once we move past weather concerns and we have the a good look at the new USDA numbers we might be left with a vacuum of fresh bullish news, poor export sales and the thought that maybe no one wants to buy $8.00 corn or $17.00 soybeans.

To be clear, I am not bearish corn and soybeans.  I do believe that it is likely we will see new highs or at least a better test of current highs.  But you might say that I am not as bullish as the $10.00 corn $22.00 soybean crowd.  I can, and do smack bullish about the supply situation with the rest of the raging bulls.  But, at the same time I also have concerns about the other side of the balance sheet that much of the trade has forgotten about - demand.  We certainly do need to price ration demand with a short crop, but this is not 2008 with high inflation and a bubble economy.  The current economic situation is that of living in the aftermath of said bubble or bubbles bursting and I'm just not so sure $10+ corn or $20+ soybeans have a place in it.  And being risk adverse as I am I see prices that if I can lock them in will make me profitable for years to come and I can't help but look for a spot to do just that when I feel the timeing is right.  So maybe that makes me unpoular, but at the end of the day all I care about is doing the best I can for my clients.

Sorry for the rant today ladies and gentleman, but it was coming sooner or later...  Shoot, while I'm at it - Happy B-day Tom G. in ND!

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

With high volatility in a weather market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 $7.70 and new crop soybeans above $16.00. 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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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 Pull Off Highs in a Big Way

Jul 24, 2012

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.   

 

I have gotten a lot of calls today asking if that the high in grains or is this just a correction in a bull market?  That is a very hard question to answer.  We have not gotten a full-coverage, soaking rain to turn the drought situation around.  However some things have changed in the markets.  With a US Dollar looking to break out, poor China economic data, and weather concerns becoming less of a topic of focus we certainly have our reasons to retreat from highs.  The question really needs to be - has enough changed to end this enthusiastic bull run?

Most likely what we are seeing in the grains is not a reversal of trend, at least not yet.  We could be in the beginning of a toping formation but with the amount of energy spent in this rally I would think that it is highly unlikely that we would give up the gun so easily.  We could see this high volatility continue, and we could still see new highs.  However, with what we have done in the last two days it now becomes much more likely then last week that we could be in the beginning to middle stages of a topping formation.  From a technical perspective, two key reversals in soybeans in 3 weeks is a big red flag.

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

It is not imposable for me to build a case for highs being in at this time.  During this rally everyone has been concerned with the supply side of the balance sheet.  There has been little talk of demand, however we need to be thinking about what these high prices mean for demand and who can turn a profit at $8.00 corn and $17.00 soybeans?  I'm not sure if that can be sustained for long periods of time with a higher US dollar, crude oil under $100 and 118 fat cattle.

My advice today has been not to sell in a panic, but look for a bounce back toward highs and if the grains fail to make new highs then look to take advantage of these prices.  This might not be a top, but it is a stark reminder of what happens when the market turns.

Options on Beans for People Who Don`t Know Beans About Options: http://www.zaner.com/offers/?page=8&ap=tseifrie

With high volatility in a weather market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 $7.70 and new crop soybeans above $16.00. 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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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

Things are getting a little weird up here

Jul 19, 2012

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.   

Corn and soybeans broke sharply off the highs coming into the pit session and things got stranger as the day went on.  Soybeans recovered well off the break and pushed back up toward highs as corn threatened to make new lows.  On the close spreads went wild highlighted buy the November 12 closing up 32 cents while November 13 soybeans closed down 26 cents.  So what is going on here?

Maybe you can explain soybeans being sharply higher and corn lower due to rains missing southern growing areas that were going through pod set for soybeans.  Maybe you can explain the sharp sell off on the pit open as fund selling.  And, maybe you can explain the sharp move in spreads toward 2012 as a function of the market knowing we will be short supplies this year yet also deeply worried about demand destruction and the potential for massive acreage next year.  Maybe the rumors on the floor are true and it's the automated algorithms to blame.  Or, maybe things just get a little strange when you're forging into uncharted territory.  One thing that needs to be a concern is that things tend to get weird at the end.

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

I really don't know that we have done enough price rationing to stifle demand, and I really do not know what the final yield will be for corn or soybeans but I have to say that price action over the last few days has been concerning, especially for corn.  And, as traders we look at the date and we know very well what this time of year usually means for corn and in a week or two for soybeans.

For now I am long and holding on.  But I see some warning signs out on the horizon and with all the wild things that we are seeing in the markets I take away one thing - caution.  Maybe corn and soybeans keep rallying for months and maybe the key reversal in November 13 soybeans does not mean anything but maybe this is indicative of topping action.  I don't know as my crystal ball is out for repairs but I do have an overwhelming urge to exit as much risk as I naturally can and wait for things to become less strange.

Options on Beans for People Who Don`t Know Beans About Options: http://www.zaner.com/offers/?page=8&ap=tseifrie

With high volatility in a weather market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 $7.70 and new crop soybeans above $16.00. 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 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?rid=Seifried

 

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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 Cool Off in Front of Rain Chances

Jul 17, 2012

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.   

Grains had a relatively quiet day today, compared to the last month and a half.  We did have news going into the night session with the USDA showing sharp declines in corn and soybean conditions.  The crops are looking poor with now only 31% of corn in the good to excellent category and only 34% of the soybeans.  The continued decline in conditions may force the USDA to keep lowering yield projections.

In a fairly high volume night session we saw some large sell orders come into the market during Asian market hours, specifically in soybeans.  The talk is that a large Asian importer may be taking profits on a long futures hedge position.  Could this mean cargo cancellations in the near future?

Options on Beans for People Who Don`t Know Beans About Options: http://www.zaner.com/offers/?page=8&ap=tseifrie

On the weather front, forecasts are looking for about 60% coverage with totals of .10-.50 inches over the next 3 days.  The forecasting models are still disagreeing over the details which is strange so close to the event.  The market also seems to not know what to expect as we saw a sloppy, two-sided trade day that ended mostly unchanged.

For the near term we will be watching radar closely to see if and where we get some rain.  Totals do not look good enough to end stress in most areas but could be very beneficial in others, especially for the soybeans.  Longer term high prices will work to ration demand, and at some point weather will not matter much anymore - what's gone is gone.

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

With high volatility in a weather market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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

USDA Sends Grains on a Wild Ride

Jul 11, 2012

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.   

 

Corn and soybeans had a huge range today ending with key reversals.  In a surprise move the USDA cut corn yield forecasts by 20 bushels an acre.  This was well below the range of trade guesses as most analysts expected the USDA to slowly lower projections.  Soybean yields also came in well below expectations.  Ending stocks numbers came in slightly below expectations as well and the initial reaction to this report was bullish.  However, when I saw the numbers my first thought was "oh my, this is really bearish".

I can understand that a vast majority of speculative traders do not really understand what these numbers represent and are just comparing the actual numbers to the trade estimates.  And if that is all you are going by I can see how this report was interpreted as bullish at first.  Yield numbers were lower and ending stocks were lower so that's bullish right?  Not in my book, not in this case.

Options on Beans for People Who Don`t Know Beans About Options: http://www.zaner.com/offers/?page=8&ap=tseifrie

I was a little shocked that the USDA was so aggressive in the changes they made, not just in lowering yield numbers but also the sharp decline in demand.  The yield numbers actually came out closer to what the reality is rather then a watered down "step down" approach that most analysts (myself included) thought the USDA was going to take.  And, in an even bigger surprise they did the same with demand.  The bottom line is that we still have almost a 1.2 Billion bushel carry over at a 146 yield!

The USDA made a statement by doing this saying that $7.00 plus corn and $15.00 plus soybeans will be met with strong rationing of demand.  I certainly agree with this notion as ethanol and bio fuels production does not make competitive sense with $7.00 corn and $85 dollar crude, and exports get very expensive with a higher US dollar.  In 2008 when crude went to over $140 a barrel $7.00 corn still offered ethanol producers some profit margin as high crude prices softened the blow of high corn and therefore ethanol prices.  This is not the case this year.  On another front exports will also suffer from high prices.  Again going back to 2008 when the US dollar was at 72.00 export demand stayed pretty strong even with high grain prices, but at the time foreign currencies got more bang for their buck and therefore softened the blow of high priced grain.  Again, this is not the case this year.

In the end, this weather market is not over.  And, if we do not get any rain in the next 10 days we will likely need to lower yield forecasts again which will call for corn and soybeans to further price ration demand.  However, if we do get timely rains I do feel that the USDA is using a pretty accurate number at a 146 corn yield and the soybean yield number could even improve.  If this is the case then a 1.2 billion bushel carry over in corn and a 130 million carry over in soybeans do not justify the prices we have on the board today and we could see the need to price grain back into a stronger demand climate.

If the rains for next week that we currently see in the forecasts do materialize then the key reversals we saw today could be the beginning of a topping formation and today's highs may hold for some time.  All eyes on the skies.

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

With high volatility in a weather market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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 Cool Off in Front of USDA

Jul 10, 2012

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.   

Grains pulled off their highs today as the trade braced itself for tomorrow's highly anticipated USDA crop production and supply and demand report.  Crop conditions declined again last week as the USDA showed us a 8% decline for corn and a 5% decline for soybeans.  Both corn and soybeans are now 40% good-excellent.  Maybe some traders were disappointed to see corn and beans holding over 40%.  The lower trade today is more likely due to profit taking in front of what could be a wild report day.

There is no doubt that the drought or near drought like conditions and scorching hot temps in many areas has caused a decline in yield potential.  The question is how much.  The USDA will weigh in on the matter tomorrow.  I have a feeling that the USDA might hold back on a major (15-20 BPA) reduction in average yield until later reports.  From what we have seen from the USDA in the past it seems that they like to stair step into and out of things and we may not get as big of a reduction in yields that the market has currently factored in.  So, this report, along with chances for rain next week could trigger a bit of a correction.

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

Furthermore, I also wonder how low the USDA will actually go when it comes to final yield this year.  We have seen them give us some head scratching numbers in the past and I do wonder if this might be a similar situation to some extent.  Time will tell.  However, I must say that in the long run ultra high grain prices this year is not a good thing for the years to follow.  We have to wonder how much demand we will destroy if corn would go to $8.00+ and beans to $17.00+.  Ethanol and bio diesel plants would sure struggle with profit margins if crude oil remains at comparatively low prices, and export demand may struggle with a stronger US dollar.

So could the USDA insist on using a higher production number then the reality in order to protect demand?  I can't say for sure that they do or do not do such things, but if they did their thought process might be to smooth out the curve instead of hitting extreme highs on supply concerns followed by sharp declines based on demand destruction...   I prefer to live in a world where manipulations like this do not exist, but if at the end of the year we are all wondering how the USDA could hold onto a higher production number then what seems realistic, well then I guess we will know why.

Options on Beans for People Who Don`t Know Beans About Options: http://www.zaner.com/offers/?page=8&ap=tseifrie

With high volatility in a weather market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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 Gap Higher on Hot Temps

Jul 05, 2012

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.   

I hope everyone have a wonderful, all be it short July 4th holiday!  It felt like the good old days with grains opening at 9:30 this morning with no night session trade or electronic market trading into the open.  The problem with this is that the very hot temps and dry conditions across the major growing areas during the July 4th holiday break caused a lot of bullish weather enthusiasm.  As technical traders know, gaps like to get filled eventually and even though grains have been trading more on weather rather then technicals we now have a big target for a retracement.

I spent my day off dragging my family up to central Wisconsin for a look at the crops and a visit with a few clients.  Everybody had a great time despite missing out on fireworks due to hot and dry conditions and fire concerns.  The conclusion was - we need rain.  I did see some fields that looked ok, but mostly I saw fields that were under some pretty good stress going into pollination, even if those same fields looked pretty good 2-3 days earlier.  We also saw a few corn fields that were too far gone for much hope at all.  The soybeans seemed to be under stress too but could come back very well with some timely rains and a little cooler temps over the next few weeks.

Options on Beans for People Who Don`t Know Beans About Options: http://www.zaner.com/offers/?page=8&ap=tseifrie

There is no doubt that the drought or near drought like conditions and scorching hot temps in many areas has caused a decline in yield potential.  The question is how much.  The USDA will weigh in on the matter on July 11th.  I have a feeling that the USDA might hold back on a major (15-20 BPA) reduction in average yield until later reports.  From what we have seen from the USDA in the past it seems that they like to stair step into and out of things and we may not get as big of a reduction in yields that the market has currently factored in.  So, this report, along with cooler temps next week could trigger a bit of a correction.

Furthermore, I also wonder how low the USDA will actually go when it comes to final yield this year.  We have seen them give us some head scratching numbers in the past and I do wonder if this might be a similar situation to some extent.  Time will tell.  However, I must say that in the long run ultra high grain prices this year is not a good thing for the years to follow.  We have to wonder how much demand we will destroy if corn would go to $8.00+ and beans to $17.00+.  Ethanol plants would sure struggle with profit margins if crude oil remains at comparatively low prices.

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

With high volatility in a weather market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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

Crop Progress 7/2

Jul 02, 2012

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.   

 

With hot and dry conditions at the end of last week, traders are looking closely at the effect that might of had on the condition of crops.  The USDA confirmed traders fears with another sharp decline in corn and soybean conditions.

The USDA is reporting corn silking at 25% as compared to 10% last week, 5% last year and 8% 5-year average.  Corn condition did take a hit from the hot and dry conditions late last week.  The USDA is reporting the corn crop at 48% good to excellent down 8% from last week at 56%.  Corn conditions are 21% lower then last year which was at 69% good to excellent at this time.

With high volatility in a weather market, option strategies may be a good tool for hedgers and specs alike.

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

See December Corn Daily chart:

Spring wheat is now 73% headed compared to 57% last week, 12% last year, and 35% 5-year average.  Spring wheat conditions declined 6% to 71% good to excellent compared to 77% last week and 70% last year.

See December Wheat chart:

Soybeans are 26% blooming compared to 12% last week, 7% last year and 12% five year average.  The USDA is reporting the soybean crop at 45% good to excellent down 8% from last week at 53%.  Soybean conditions are 21% lower then last year which was at 66% good to excellent at this time.

Options on Beans for People Who Don`t Know Beans About Options: http://www.zaner.com/offers/?page=8&ap=tseifrie

See November Soybean Daily chart:

The reaction to this report could be bullish due to the sharp decline in corn and soybean conditions and the overall poor conditions of the crop.

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 in the $6.50 range and new crop wheat in the $7.90 range. 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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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

Log In or Sign Up to comment

COMMENTS

Legacy Newsletter
 

Follow Us

Facebook Twitter You Tube
 

Hot Links & Cool Tools

    •  
    •  
    •  
    •  
    •  
    •  
    •  

facebook twitter youtube View More>>
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions