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.
Since June 13th the November Soybean contract has dropped a little over $2.00 as weather concerns have been washed away by heavy rains in July. The hot and dry scenario that some weathermen and analysts were expecting has not played out in a way that has negatively effected crops, at least not yet. Now that soybeans have retreated back to price levels not seen since April can they manage to bounce back?
Soybean crop conditions as of July 24th stand at 71% good to excellent. This means that this is a very well rated soybean crop. And, the current weather forecast has most of the growing area under good conditions as soybeans go through their most moisture sensitive stage - pod set. The potential is for a very good soybean crop, possibly even beating the USDA's lofty expectations.
However, the US soybean crop is not made yet. There is still time for weather issues to negatively impact yields, and some weather forecasts are getting a little more concerning for the month of August. Hot and dry conditions in the next few weeks could still harm corn and soybean production.
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From a technical perspective the November soybean contract has gotten pretty oversold with the Relative Strength Index (RSI) at 34% on a Daily chart. The soybean RSI has not been this low since putting yearly lows in back in February-March. Also, soybeans are now running into the lower extremes of the downward trending channel that they have been in since putting in highs back in June. So far soybeans have respected this trend channel and have bounced off of this support the last few times it was tested. This does not mean soybeans can not break this support at this point, but is we were going to get a bounce this could be a good area to do it.
The next few weeks could be very interesting for the soybean market. On August 12th the USDA will give us their first field based yield estimates and this could have a significant impact on balance sheets and the market. In the mean time we will also be watching weather very closely. August could be a wild ride especially if some weather concerns crop up.
We have some complimentary 2016 commodity reference calendars available. 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.
DecemberCorn Daily chart:
NovemberSoybeans 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.