July Soybeans

After the close on 5/28/10: My pivot acted as resistance and was 9.53 3/4, just .02 1/4 from the actual high, and my support was 9.36, just .00 1/2 from the actual low.

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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 Soybeans Daily Numbers & Trade Ideas for 5/28/10

May 28, 2010


This report was sent to subscribers on 5/27/10 6:20 p.m. Chicago time to be used for trading on 5/28/10. Everything is done by Howard Tyllas, no program or black box.

Do yourself a favor and get your numbers after the market is closed to be used for the next session trading. Ask yourself how much would it have been worth to read my comments and get my numbers 14 hours before today's open outcry?  

July Soybeans

After the close on 5/28/10: My pivot acted as resistance and was 9.53 3/4, just .02 1/4 from the actual high, and my support was 9.36, just .00 1/2 from the actual low.

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9.76 XX            Buy Stops Above here

9.71 1/2              Key resistance at the downtrend line

-------------9.53 3/4        Pivot

9.36                              

9.20                     Key Support at bracket line

    

Trend                  

5 day chart...      Up from last week same day                                                

Daily chart   …. Sideways                   

Weekly chart …Sideways           

Monthly chart   Sideways $9.81 1/4 is the 200 DMA

ATR 14 1/4        Overbought 88%



In the middle of the bracket line support at $9.20 and downtrend line resistance at $9.70. The uptrend line near $9.46 is pivotal.

July Soybeans for 5/28/10: 

In my daily numbers on Thursday; my resistance was .01 1/4 from the actual high; my pivot acted as support and was .00 1/4 from the actual low.

Patience to wait for good locations to enter a trade will reward you by providing minimum loss if wrong, and more profit if right. You might miss trades (some glad you did) and not be as active, but this type of trading makes you a casino, not a player.  

Grains: Spot on soybean numbers and corn resistance, corn support was accurate. Now that corn is extremely overbought and soybeans overbought, a pullback is in order going into the 3 day holiday weekend. Tonight grains are a little softer as I write. Not much happened this week as far as price is concerned, and I look for a normal trading day today. Strong corn sales but not soybeans or wheat lent support on Thursday.

I do not care what the PRC buys this year if the weather continues its path to record yields that would more than offset the purchases. I am sure grain traders will be watching weather forecasts when we begin trading on Monday night, and the bears will be watching for the northern Midwest for rain, and the rain in parts of the south. Nothing has changed in my fundamental thoughts, in 2 or 3 weeks the bears will be showing their claws if ideal weather persists. Until then the market should continue in a sideways trading pattern.

July Soybeans for 5/27/10: 

Grains: Spot on and accurate grain numbers. More sideways trade and position adjusting going into the 3 day holiday weekend. Corn is a little softer tonight as I write, and my thoughts remain the same thinking the next 2 weeks will see corn trade in a range $.15 above or below the current price. Same thoughts in soybeans with $9.55 and $9.70 being resistance, and $9.20 and $9 should be good support in July soybeans.

You can spin the fundamentals to your liking,  I told you clearly what fundamentals I look at, why I think the fundamentals are bearish, the what is now, and the what if's if any happen. I told you I am more concerned how a market reacts to the news than the news itself. 

July Soybeans for 5/26/10: 

Grains: Spot on soybean and corn numbers! Soybeans are nearing bracket line support at extremely oversold conditions which bodes well for a corrective bounce soon. Market is firm in the night session trade as I write. Corn had its rally and now is seeing a pullback, and since the market is balanced, it could go either way today, and corn is up tonight.

The market is still faced with uncertainty about what production will be this year, but the next 2 weeks the bears could not ask for better weather. For now, funds and producers are able to wait it out and they are counting on the fact of the odds in their favor for some type of weather concern to get a rally during the growing season. When they do start selling it will not be speculative and have the need to buy back, but rather it will be to liquidate speculative positions and producers selling grain to empty bins and receiving cash. This should cap rallies and aggravate selloffs.  

My thoughts are the same as before, corn should go sideways, and soybeans are trending lower and warrant selling rallies.

July Soybeans for 5/25/10: 

Grains: Spot on soybean numbers and corn resistance, support was not in play. You had all day to sell against the pivot as they traded at $3.72 most of the day. I would have swing traded it overnight looking for a retest of $3.59 support. I would have risked 3 1/4 cents to make 13 if right.

Tonight the market reacts to the bearish crop production report and is shaving a few cents off of soybeans and corn. I have the same bearish thoughts as always. Funds hold 49% of the soybean open interest (total contracts) and 42% of the corn. I can only think of their positions like betting a long shot of the chance of poor weather with odds of $1 higher in soybeans and $.50 in corn if they are right (unless a major yield shortfall) and they probably are defending the $3.53 level in July corn and $8.80 in July soybeans as a line in the sand for risk tolerance. I think the odds should be at least double what I see as being offered for their trade idea, and at this time I consider the upside a "sucker bet" and would use a known risk strategy to sell as they rally this year.

Bears like me will wait about 3 more weeks from now with a good forecast before serious selling will be on my cards. Before then I will continue to want to sell at a resistance for a day trade, keep short swing positions at these levels and look to take profits at support levels. My continuing commentary has been spot on looking for a sideways trading affair with the same parameters I have had for weeks if not months. As a trader of grains for decades, this was not hard to predict based on the timetable that Mother Nature gives us for a growing season. Knowing how the market breathes, with supply my main focus for how I approach the growing season, and the endless year after year crop scares that but only a few years turn in a shortfall in expected production that alters price. I am fully aware of the January "Final USDA Report" can be a game changer, and when it is the market discovers the next price level quickly. March, May and June can be game changers too. But my focus on supply I have learned is the gas pedal on rallies. When you have burdensome supplies the production shortfall rallies are limited and like having your foot to the floor on a Hugo, but when supplies are less than adequate and the same production disappears, it is more like when I put my corvette in second gear and doing zero to 60 in 4 seconds flat (stock out of the factory).

Bottom line was always the same as now, I use the chart for trade location, and the numbers are the street address when I am close. The fact of gaining experience on the fundamentals for use in direction is one thing, the mere fact that you gain experience from looking at the charts and practice through trading the discipline it takes to execute whatever your approach, money management, or time frame is more valuable.

Results for 5/24/10 were:

Soybeans: My resistance was .02 1/2 from the actual high; my support was .02 1/2 from actual low.

Corn:    My resistance was .00 3/4 from the actual high; my support was .04 1/4 from the actual low. 

Crude Oil: My resistance was 0.27 from the actual high; my support was 0.47 from the actual low.

S&P:    My resistance was 8.00 from the actual high; my support was 2.75 from the actual low. 

Gold:     My resistance was 0.90 from the actual high; my support was 0.20 from the actual low. 

Euro:    My resistance was .09 from the actual high; my support was .11 from the actual low. 

Bonds: My resistance was 9 from the actual high; my support was 13 from the actual low. 

Nat. Gas: My resistance was .043 from the actual high; my support was .034 from the actual low.   

Cattle:  My resistance was .10 actual high; my support was .50 from the actual low. 

July Soybeans for 5/24/10: 

Grains: Accurate grain numbers. More sales to the PRC is the only thing I can see fundamentally that was supportive, and technically corn posted gains of $.06, wheat $.00 1/2, and soybeans lost $.12 1/2 on the week.

Corn is in the middle of their 2 month trade range between the bracket lines. July soybeans are $1.18 lower than when they started 2010 and the bears look to test the bracket line support at $9.20 next. Any rally in soybeans on the heels of corn should be capped at $9.70. Corn needs to close above $3.87 1/2 in order to turn the chart friendly. They held their lows once again at the bracket line support (another example of why I use bracket line support) and have $.15 either way (up or down) to get to a bracket line.

Same fundamentals as last week that I consider bearish except for the PRC factor which is impossible to predict. Funds positions are basically in a holding pattern awaiting further clues as the rest of us. Ag markets held up well last week considering the good weather and outside markets that probably held grains from doing better.

Bottom Line this week is as I said in my comments for Friday, corn having a good day on Friday could embolden the bulls to mount a charge to test the $3.85 level, and if they do that they could drag soybeans to test $9.70. I want to trade the numbers without bias for day trading, and I want to sell corn and soybeans at the resistance levels.

July Soybeans for 5/21/10: 

I will be back in Chicago this Saturday, and then I will return to a timelier schedule. I will try and get part 1 out on Friday for this Monday 5/24/10.

Grains: Spot on soybean and corn numbers. Another day of bullish fundamentals did little to ‘float the boat" until late in the open outcry session when prices recovered to post small gains. I feel the same as I did yesterday, "market reporters" such as commission house salesmen, and analysts continue to spin the "bullish side" of the story, while I concentrate that we could get a 166 to 170 bushel per acre corn yield this year which would certainly cause grain prices to work much lower from here if realized.

I am not saying that we cannot work a little higher; I just do not want to bet on that, instead I want to wait patiently and see if I could add to a short position on a rally near a resistance level. I feel since the bulls cannot ignore the bearish fundamentals, any rally will be short lived. Today the bulls put another wrong tilt on the forecasted 90 degree temperatures forecasted for the Midwest, saying it is a precursor for possible hot dry weather moving forward. That might be true but it is still a "what if" not a "what is". The "what is" for me when I look at this forecast is just what the Doctor ordered. We NEED this weather next week considering the cool wet conditions that has slowed development.

Whatever the fundamental picture is and the current why the market moves up or down is always secondary to my charts and my numbers. While the bulls spin the cup ½ full, I consider it ½ empty.

Technicians might look at the lower prices for the run and a higher close as a key reversal, but I know better and know that all it means is that it should follow through the next day. (As I pointed out recently on 3 markets with the same signal in which in fact they all continued the direction for at least the next day) What the bulls need is a significant up day on Friday to embolden them and throw a caution flag to the shorts.

I want to day trade from the short side when possible, and continue a longer term short position that takes profits at supports on some of it and look to re-sell on a $.10 rally in corn or $.20 rally in soybeans.

Producers in the US and S. America I think are making a mistake by not selling what they have grown. I was told that most hedging services are telling their producers this week to finish selling the 2009 crop, are they joking? I recommended that ALL your crop be fully hedged by the January 2010 USDA report, and warned all un-hedged positions have more to lose than gain. I also wrote in my daily newsletter many times, a way to have your upside using options instead of futures to "own" some upside if they rally, risking only a minimum amount if wrong, instead of the huge losses they would have seen with futures or "cash" from un-hedged grain. Even if corn was $.30 higher from here and soybeans $.50 higher from here, you would be deeply underwater from where you could have hedged, and worse than that it is still un-hedged and you are faced with the same question, where am I going to hedge? The same option strategy I recommended for producers could have been used by speculators who wanted the downside, or the upside if bullish, both having a known risk and reward, and known margin if any.

Even if corn and soybeans were $.20 higher or more right now than in January, was it really worth the money if you had to wait until now to earn that? What do you think, the farmers of both countries who did not sell are using hedge strategies that allow for the upside but protect from the downside? I think not. I have little respect for almost all services I have seen, the pure "I think grain prices will be ...... and hedge 20% of your crop here, and % there, and more there, but when the market goes down instead, it is the farmer who loses money, not them. These archaic strategies were made for markets when I first started trading grains, but do not come close to the flexibility options strategies provide. I think the main reason they shy away from using options is the lack of knowledge on how to use them and not have them use you. Most of my producers have learned more from me than what any of their previous services representatives know about options. I always thought that hedge services had someone calling the shots with somewhat the experience I have, but it does not appear to be anyone who does. Even an 8 year old can tell you who they think will win a game or which way grain prices will go, and you think they have a 50/50% chance because it can only result in 1 or the other, but the casino's and bookmakers will tell you they do not.

In my mind unsold grain held by producers is bearish, I cannot see the reason for US farmers to be outright long unsold grain, but at least the farmers in S. America are waiting for the currency to devalue soon and therefore holding onto a dollar denominated commodity.

July Soybeans for 5/20/10: 

Grains: Spot on corn numbers and soybean resistance, soybean support was accurate. Every fundamental that was supportive did nothing in the "real world" of price discovery on Wednesday, while my daily numbers could care less in what drives the market. Another disappointing day for the bulls and a good day for a trader like me who wants to sell resistance for a day trade. Funds look like they are playing poker with nothing in their hands, but have most of the money on the table and want to bluff. They really would like to get some cards to play with (adverse weather or new PRC purchases) and as long as there are more cards to be dealt (more time to pollination) they continue to bluff with a losing hand.

I continue my same thoughts about this market as I have been saying for months about the fundamentals I have in play. I have been following the fundamentals in grains for 34 years, and I rely on my own thoughts, I have seen the rest of the analysts since the beginning, and how many can say that they are still around today, or today's analyst who might be 34 years old let alone trading that long. Fundamentals and trading are 2 separate things; numbers are my power, not knowledge of fundamentals even though I consider myself an expert analyst. My experience has taught me well about the changing world of trading since the funds came into power, and the one thing that is consistent and the foundation for my trading, has always been in the numbers and not the news or fundamentals. I feel I have conveyed this to you since I started my service. The fundamentals are drivers of direction at best. It is like playing poker, "a mind game", but when the bets are made and it is time to show what you got, the settlement price is always the real price no matter what you think it should be.

It looks the same as yesterday and before; the market is going nowhere and marking time. I want to sell rallies rather than buy breaks

Subscribers of 6 months or longer have seen this 3rd time at the down or uptrend line works a high % of time, and the risks are minimal when it does not hold, and rewards you nicely when right. No matter what market you trade, learn this tool that I have relied on for decades, and my instilling courage to believe in this in you that took me so long to truly believe in. I take these trades every time when possible, and in the long run in my years it has truly been a casino bet for me and not a player, and are the ones most worth taking. See for yourself and if you see this pattern works, start to incorporate it in how you use it to trade with. 

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

The 9 markets now covered daily are Soybeans, Corn, Crude oil, S&P, Euro FX, 30 yr TBond, Gold, and  Natural Gas and Cattle

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           May Your Next Trade Be The Best                          

                     Howard Tyllas            

  

Disclaimer:     No guarantee of any kind is implied or possible where projections of future conditions are attempted. Futures trading involve risk. In no event should the content of this be construed as an express or implied promise, 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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