Sep 21, 2014
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The Ted Spread

RSS By: Ted Seifried, AgWeb.com

Ted is the Chief Market Strategist and Vice President in charge of the Zaner Ag Hedge Group and specializes in agricultural hedging employing various strategies using futures, futures spreads, outright options and option combinations. He believes it is paramount to be able to use different strategies to adapt to market conditions. Ted works with large to mid size grain and livestock producers and end users in North, Central and South America.

Was Planting Progress Friendly for a Rally?

May 28, 2013

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.      

New crop soybeans and new crop corn were sharply higher after the Memorial Day holiday.  The talk was that better then expected rains falling over much of the midwest delayed planting.  On friday the trade had been expecting corn to be 85% planted and soybeans around 40%, but with the rains there was talk that corn could only be 80% planted and soybeans around 35%.  Tuesday afternoon's crop progress report showed otherwise as corn is now 85% planted and soybeans are 44% in.  So, if the trade really lowered their expectations for this report and this was the reason for much of the rally then this report would suggest that this rally was not completely justified and may have been overdone.  

As I break down the crop progress report it strikes me as being pretty bearish despite the extra rain.  Corn is now 86% planted and even though we are well behind last years pace of 99%, we are now only 4% behind the 5-year average of 90%.  That's right, after a record slow start corn planting is now only 4% behind average!  And, it is probably a good thing we are behind last years record pace because we all know what happened with that...   

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

Looking at the I state breakdowns - Illinois is 89% planted compared to 89% average.  Indiana is 86% planted compared to 77% average.  Iowa is 85% planted compared to 98% average.  So Iowa is still a bit behind, but Illinois and Indiana are at or ahead of the 5-year average.  Iowa could catch up fast if they get an opportunity, and they still have time.  There are 2 states that are concerning - Minnesota is 82% planted compared to 95% average.  Wisconsin is 64% planted compared to 85% average.  There will likely be some corn acreage lost in these 2 states as well as in North Dakota.  However, the acreage lost could mostly be fringe areas and this could add bushels to the national average yield.  

As far as soybeans are concerned 44% planted is 17% behind the 5-year average of 61% but a 20% jump in a week is impressive.  Some are saying that soybeans planted after June 1st may have a lower yield potential, but we are rarely finished planting soybeans by June 1st.   So, some soybeans may have a slightly lower yield potential then in previous years, but it seems that soybeans may be picking up some corn acres which could more then offset any loss in yield potential.  

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

If you are looking for ideas or want to talk strategy feel free to give me a call or shoot me an email, you will find my contact info below.

December Corn Daily chart:

November Soybeans Daily chart:

December Wheat Daily chart:

All this means that speculators should be looking for opportunities and producers need to look to lock up some prices while we have corn near $7.00 and soybeans near $14.00. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

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

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

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

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

Futures, options and forex trading is speculative in nature and involves substantial risk of loss.  This commentary should be conveyed as a solicitation for entry into derivitives transactions.  All known news and events have already been factored into the price of the underlying commodities discussed.  The limited risk characteristic of options refers to long options only; and refers to the amount of the loss, which is defined as premium paid on the option(s) plus commissions.

FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STRIKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR EVEN MOVE IN THE OPPOSITE DIRECTION.

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