TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS ANDMAY 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.
March corn closed at it's highest level since November 8th and is nowclose to challenging recent highs after significant pressure last week. Solid export demand and some questions about weather have added to support. Can corn continue to gain momentum?
After the first few days of December the question I was hearing most was - Is corn headed to new lows? And, what a difference a week makes! That question has been replaced by - How high can corn go? The answer is the same... It depends on South American weather and what happens with exports. What has changed in the last few daysmay havesomething to do with both.
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When it comes to South American weather it is much too early to speculate on what this crop will look like. However, subsoil conditions in some areas are not as good as they have been in the last few years. This has left the door open for concern, both from short speculators and from global end users. And, with some areas in both Brazil and Argentina looking a little dry the market has been quick to react.
Some dryness concerns in Argentina and Brazil may have triggeredsome global end users to get more anxious about booking needs. At the same time speculators may have less interest about holding large short positions going into the last few weeks of the calendaryear. On the surface the significant drop in open interest is not very bullish for corn. This suggests short covering rather than new buying. But, some times short covering is the precursor for new buying, so we will have to see.
As I have said a few times before... Short covering can go a log way at this time of year because the producer is likely not going to be an aggressive seller of cash corn above and beyond what was sold on harvest. This is a time of year where producers might hold tight after locking the bins and basis may have a chance to improve. If we throw a chance of a South American weather problem into the mix a short covering rally may find some legs. Again, it is early in the SA growing season, so this could be an interesting holiday season.
We still have some complimentary 2016 commodity reference calendars available (2017 coming soon). They are a little bigger than pocket sized and very useful if you follow markets. (Shipping to the US only)You can sign up for yours here - http://www.zaner.com/offers/calendar.asp
Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action. Ted Seifried - (312) 277-0113. Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.Follow me on twitter @thetedspread if you like.
MarchCorn Daily chart:
JanuarySoybeans Daily chart:
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 email@example.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.