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


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.

January Soybean & March Corn Daily Numbers & Trade Ideas for 12/8/10

Dec 08, 2010

top1

This report was sent to subscribers on 12/7/10 2:15 p.m. Chicago time to be used for trading on 12/8/10. Everything is done by Howard Tyllas, no program or black box.

January Soybeans

After the close recap on 12/8/10: My resistance was 12.99 3/4, .03 1/4 from the actual high, and my support was 12.73 3/4, .07 1/4 (but off only .03 3/4 in open outcry) from the actual low.

March Corn 

 After the close recap on 12/8/10: My resistance was 5.75 3/4 .00 3/4 from the actual high, and my pivot acted as support and was 5.55 1/2, .03 1/4 (but only .00 1/4 in open outcry) from the actual low.

Subscribe now! 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?

All charts and numbers for 12/6/10 have already been sent to subscribers at 5:20 pm. 

Sign up For Free 1 Day Trail of Daily Numbers & Trade Ideas

 Sign Up for Learn a better way to hedge for farmers

January Soybeans

13.07 ½       Use the same numbers as used on 12/7/10             

12.99 ¾                                  

--------------12.90                  Pivot

12.80 ¼   

12.73 ¾ XX 

12.58

Trend             

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

Daily chart   ....  Up                     

Weekly chart ... Up                

Monthly chart    Up        $10.33 is the 200 DMA

ATR 31                            Overbought 75%  

Bean 7 8 10

I still say "Bracket line at $12.91is pivotal now, and $12.41 bracket line is support, and then the key support is the uptrend line at $11.60. High of November is the only resistance above $13.07".         

January Soybeans for 12/8/10:

Bulls remain in control as long as the new uptrend line holds which is near $12.35 this week. 

In my daily soybean numbers on Tuesday; my resistance was .03 ½ from the actual high; my support was .02 from the actual low. 

 March Corn

5.75 ¾

5.70 ½

------------- 5.63             Pivot

5.55 ½

5.42 ½                            Key Uptrend Line     

   

Trend          

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

Daily chart   ......     Up                       

Weekly chart .......  Up             

Monthly chart ....    Up 4.51 ½ is the 200 day ma

ATR 18                      Balanced 57%    

 Cron 7 8 10

at $5.06 ¼ when the market jabbed below it briefly. Bulls are ready to take back control of the market if they can close above the top uptrend line that now acts as resistance".

March Corn for 12/8/10:

In my daily December corn numbers on Tuesday; my resistance was .00 ½ from the actual high, and my support was .01 ¼ from the actual low.    

12/8/10:    

Grains: Spot on numbers! I really do not care what caused the grain markets to go almost exactly to my resistance numbers, since I had no bias and at my resistance numbers was clearly a sell signal. $.04 and $.07 risk returned an excellent profit since my numbers were spot on. New subscribers who do not understand how you can risk so little if wrong, unlike like most who risk an arm to make a leg. It is great numbers that allow my risk reward to work, and makes me the casino getting the odds instead of a player giving the odds and trying to beat the odds against them. Remember, when you trade commodities, open a store, buy stocks, real estate, or even walking across a busy street, there are odds and risks always present in the pursuit of profitable gains. I call this pure gambling, and unless you are a good gambler, your chances are almost nil. I had a call from a speculator who has held his own the first year being down only a little, and he asked me if it is true that only 10% of commodity traders make money, and I said no, I think it is more like 1% if that, at least that is what I have seen for 35 years now. I am even talking about back in the day when there was an average of 35 new members a month that put on a trading badge and thought they can do this for a living, seeing as some were highly successful in what they were doing before becoming a floor trader. They did well if they could last 6 months, maybe one went longer, and maybe 12 went more than a year, but basically out of the 10,000+ I seen in my day, not many made it for any length of time. I see the same people on the floor today that made it before I bought my seat in 1976, and the same people that started with me or not long after, and of course a huge new membership that I will not be able to see them appear in the headlights of a Mack truck and stand there and watch the truck hit them leaving the bulldog imprinted on their faces. "Stuck stay stuck", and a trader who wants to stay alive to trade another day should have a solid risk management plan and an approach that works, and when it does not work anymore, trade small until they figure out what does work for them now. The worst thing to do is have a fundamental approach that does not incorporate a risk management when wrong.

The reason I say this is to stress that staying in a market and be random in your entry and or exit, is truly a one way ticket to not being able to trade due to losses. My strategy is simple, use my charts for long term support and resistances, and derive daily numbers as to what the probable high to low will be in that given day. This is my biggest advantage over all others I have seen, my numbers are the best I have ever seen in my opinion. Old subscribers who were skeptical at first, are now confident that they truly are highly accurate. Again in my opinion these are the best numbers second to no other. Confidence, that is what it takes to execute your trade ideas, and when you have numbers this good it can be done with a minimum risk. The market and its fundamentals do not prove me wrong, the inability for my number to hold proves me wrong, and I do not need to watch grains go $.10 or $.20 against me to prove me wrong. Not losing money is the exact same thing as making money. Have a plan and approach that works for you, and take whatever you want from what I do that will improve what you are doing.

It sounds crazy to tell my subscribers who have made this service very lucrative to think twice about trading and the potential for losses because almost all do in time, but my service is a reflection of myself and I will not deceive anyone even if it costs me money. I could not sleep at night, unlike some "commission house brokers" I have talked  to who basically treat people like a piece of meat, and I ask how they can sleep at night knowing you only care about generating money instead of doing what is right, they all say they sleep knowing they made the money. Their justification is the client like almost everyone they ever had, will lose money to the market anyway, so why not get their share.

I believe only if you are discplined, unemotional, and can execute a solid plan, can you be successful in time. I have had people who like on the roll up put program stopped rolling up at some point thinking the market will continue to go up and the puts were a waste of money, and then reality set in when soybeans broke $1.70+ in 3 days, and corn at one point giving away $.95. The casino knows that they can get beat in the short run, but in the long run their plan which has odds in their favor will win out, I think the same in trading, when you are getting odds, and risking little on each trade idea going after a good reward.

Main reasons I spent this much time tonight for both new and old subscribers, is to remind you not to slip into any bad habits that your journal has shown you had in the past, or still are working on. I also realize there are many traders who lose money every year, but it is only a percentage of their income (and their wife or husband has no problem losing that dollar amount), and for them it is no different than what they would have gambled and lost in Las Vegas anyway. They enjoy the gamble and thrill that goes with it, and they like the gamble of this game rather than the ones offered in Vegas. I have no problem with that, and I think you have a better chance in commodities trading, and improves greatly after you have learned what works for you and what does not. The more knowledge you have, the better your chances to succeed. But even if I give you the high and low of the day which for me is my greatest imput to when and how I take a trade, it is you who executed your trade and you should take credit for success or failure.

Back to my thoughts about the market. I read the average trade guesses have already taken 21 MB down from 827 to 806 for the 2010/11 corn carryover, and soybeans lowered to 160 from 185. These estimates are lower than what I thought, and the corn market certainly is looking the worst on the chart. If this is already priced in, the bulls should need more to take them higher. Soybeans are still the grain to explode to the upside if the numbers come in well below expectations, but corn will remian the weak sister on the charts until something changes. It looks more than ever to me that you have seen the high in corn before the January report.

Since there is only day to day fundamentals at work right now, I have only said the fundamentals that have meaning to me, and spare the "chatter" that comes with someone whose job as a market reporter is to write "the news". That is why I decided it was time to write what I did, because those thoughts about having a plan that has strict risk management that you should reinforce throughout your career, until you become a machine like me, and follow it without effort or second guess. Yes, I am always an observer, and when something is not right, I work to correct it or stay away until I do, but my approach has not changed because it is solid for me since my start.

I remain in day trader mode, and revive my call to sell resistance just seen and that I have outlined in my parameters. Numbers have been spot on so I want to trade without bias, even though the market looks like it has inhaled enough (went up) and now it is in it's exhale mode (going down). I want to risk the same as before, $.04 in corn and $.07 in soybeans on any trade idea using stop to protect.

I could have gone into more detail, but 1 ½ hours and 1500 words is about 500 more words than I want to write when the fundamentals are not really in play, or new. I am going to the beach across the street from my hotel in Thailand now, and enjoy a couple of hours of vacation time after I send this, where it is 85 with a nice breeze. I am compelled to write like I was on your end, and that I would want any information deemed worthy for comment. The lack of fresh real news that can affect the market was almost nil today, and so I took the opportunity to cover these thoughts.

12/7/10:    

Grains: Spot on grain numbers! Exports for both grains were disapointing again, but the market is expecting them to be revised next week. Dollar moved but I think that is not in play now, and until the dollar moves greatly, it is just another reporters way of making the story fit the market action. Question remains if the USDA will raise export projections this Friday, and even more important is if they will lower their carryout estimate from 185 million on their last report. Funds sold 8,000 corn contracts today after buying 10,000 on Friday. Ethanol tax credit up in the air, SA got some rain over the weekend, and as I have said before, I think these markets will trade in the range I outlined on 11/20/10, but the fundamentals and charts point to higher prices, it is just a question of when. My guess is after the report this Friday. If not, I still think in the next 4 months corn and soybeans will rally past their 2010 highs.

As you have witnessed and I have said, for me it is easy to find what the high and low of the day will be, what is hard is the week to week trading. Yes, I do consider where prices will be in the future, but as you have seen with the amount of unknown forces at work, it makes it much more difficult to predict. So why take the hard road when I can take the easy road? Remember, I want to be the casino and not the player. I am looking for odds in my favor and it just is not there for months with long term trading. I still want to get long for a long term trade, and I would do so before the report if near my support parameters.  

For now though, I want to day trade without bias and risk $.05 in corn and $.07 in soybeans now for a day trade using the numbers and using a stop to protect.

12/6/10:    

Results for 12/3/10:

My soybean support was .02 ½ from the actual low, and my resistance was .05 ½ from the actual high.

My corn support was the EXACT actual low, and my resistance was .06 from the actual high.

My nat gas support was .044 the actual low and my resistance was .067 from the actual high.

My crude oil support was .40 the actual low, and my resistance was .39 from the actual high.

My bonds support was the EXACT actual low, and my resistance was 11 from the actual high.

 My gold support was 2.30 the actual low and my resistance was 7.30 from the actual high.

My S&P support was .50 the actual low and my resistance was 2.50 from the actual high.

Grains: Spot on grain numbers. Looks like after the close Thursday it was known that it looks like they will have an ethanol tax credit at $.36 instead of .45 but it would be for 5 years, so we will see what happens but that is bullish to me. High on the news list was the wheat market that I just skimmed over, but the last line on the grains was "a dry weather forecast for Argentina for the next week is providing a level of support for soybeans and corn". That would be an understatement if it is true. I have been warning for new soybean highs this year if it continues dry in SA. Soybean balance table has no room for a shortfall there.

Soybeans went through and closed above the $12.91 bracket line which is bullish, and if they get through $13.07 ½, the only resistance left would be at this year's high of $13.48 ½. Corn is grinding higher with layers of resistance above. At $13.07 ½ and $13.48 ½ would be places I would consider rolling up put spreads, and $5.80 and when near $6.08 ½. Both markets are extremely overbought which testifies to the strength of the buying, but vulnerable to a day trade corrective sell off at resistance numbers being in that condition.

It looks like the market wants to go higher sooner rather than later like I thought. I want to buy pullbacks rather than sell resistances, and I do not want to go short except in day or short term trades, but rather go long for day to long term trades. We could rally before this Friday's report that should be a "nothing" but I have a feeling it is going to be a "something". We then could continue to rally, or breakdown shortly after the bullish news is out as was the reaction the last report produced. I am in a short term mode, and with daily numbers like mine you can see why. I have no problem with longer term trades, I just do not take trades without conviction, and it just is not there at these price levels. The only way I could stay long futures here is with a put spread strategy that gives me the protection I need to limit my losses if I am wrong and the market goes down. Day trading gives me less risk and with zero risk overnight. When open outcry begins I see if the market trades to a price that I am looking to buy or sell that day, and I place my entry order along with the stop to protect. If I do not want to take the buy, or sell, or either one, then I do not take the trade. Day trading is not for most people, but it is right for me in the grain markets.

I want to talk about bull spreads and other strategies, but since I am going on a 14 hour flight to Japan today, I ask you to refer to the spreads I gave as examples, compare the price on settlement that day, and where they settled on Friday. (If I had time I would do it for you, but if you are serious about options, you must get used to doing this yourself. You will learn greatly if you become an observer of future price, and the daily settlement of the strikes you are looking at, and see how they move in relation to the underlying futures price.)

My thoughts are the same as Friday when I said "I want to trade without bias and use the same .05 in corn and .08 in soybeans using a stop to protect any trade idea".  

12/3/10:    

Grains: Spot on numbers! Tonight the numbers are also spot on as well as last night. These markets are trading by the numbers once again since there is no true short term direction. Corn would have puked earlier in the day, but soybeans and wheat were too strong and underpinned corn until those markets gave up most of their gains and left corn unsupported. Exports have not been going well lately but have little to do with day to day trading at this time. This week 17 Senators signed a letter arguing against extending the ethanol tax credit, and 15 signed another letter arguing for an extension. Corn grind I keep talking about is on track for 5 billion bushels, another 200 million more than the last USDA report that was already raised 100 million. Now that energy prices rallied, ethanol discount to gasoline is now $.25, but take away the $.45 tax credit and the pace of the grind should slow. Feed/residual use and exports are really up in the air and everyone has been pointing to the January Final report for answers to these unknowns. You can bet on the fundamentals, but I bet on my charts and numbers that I derive from them.

Soybean exports on the other hand have been brisk, but after the .40 gains yesterday it could not follow through, and the reason in my mind without a doubt was the bracket line at $12.91 and NOTHING else. Sellers again were there at that level, and no matter what the bulls threw at the 12.91 wall, they could not break through and retreated and went home saying tomorrow is another day. When you observe this same thing happens more time then not in all markets you follow, this should establish in your mind that if for no other reason the number works, is because enough traders are viewing the number the same way and will sell a resistance number, and buy when at a support. Day trading the supports and resistances are easy, but longer term trades have many objectives and time frames and are solely based upon each trader's thoughts, ideas, and time frame, as well as tolerance for pain, risk management, money management, and size of account and so on. But that is what my bracket line and trend lines do for me as locations to enter or exit a trade idea that is longer term. They are my objectives, and they also where I start buying or selling from because if they do not hold the line, I am stopped out for a small loss, but if right and they go to the other line, I take profit.

I think it was in 2009 when soybeans lost their tax credit so the ethanol tax credit will do little for the soybean balance sheet. What will impact prices is if next Friday the USDA reports (and this normally is a non event) more soybean usage or a revision to exports higher. This should propel some kind of rationing thoughts and feelings, and this is always done through higher prices. This is another log that could be thrown on the soybean fire this month, but until it is lit it is still a trading affair with the parameters outlined by my charts. I am bullish soybeans and believe they will be higher in a month or two than where they are now, I would bet small on that, but for a producers ears that sounds good. They heard me the first 6 months of this year wanting to be a seller against $4.50 unless the market went above $4.54 which I said there was really no resistance until $5.42. I tell it like I see it and think it, otherwise I would be like the boy who cried wolf and you would not know when to believe me. I do not sell predictions or trades, they have monkeys and all kinds of animals doing that before the super bowl and to see if we will have an early spring, I only promise to tell you what I think and what trades I would look at taking and more importantly the reason why chart wise. 

The markets are doing well to be at these lofty levels and I certainly would look for the soybean market more so than corn to get long for a long term trade. I just think it is too soon, and not a good location to do so. Can they go higher from here? Sure, I just do not feel I am a casino here, and would not lose money if they do go higher, but I do know that if I buy here on a long term trade and the market goes down instead at first, where I would be looking to get out is where I should have been patient enough to see if the market came down and a good trade location developed to enter, not exit. And if stopped out I only lose a little being patient, much more if I buy here. Hard to say not to take the sell signals only today, but I would trade without bias and use the same $.05 in corn and .08 in soybeans using a stop to protect any trade idea. 

12/2/10:    

Grains: Spot on numbers. Argentine dryness dominated the news, and with the perfect storm of dollar sell off, crude oil rally above recent highs, and strong equities markets (allows more risk taking), grains rallied towards higher prices. Follow through is not in the cards tonight for all markets mentioned. What the other markets are doing is not a concern to me on the day to day price movement, but cannot be ignored in the bigger picture. La Nina is in a strong pattern right now in SA, but at the same time they are receiving rainfall. How much coverage and what amounts actually fell, are like asking the OJ jurors to come to a unanimous decision. This was the first sign of trouble I have seen in price action, but more dryness is needed to bolster prices at this time. Different growing regions have received 25 to 69% of normal rainfall. Rains over the last week seem to have greatly improved conditions. The extended forecast is dry again. Brazil looks good at 96% of rainfall average for the entire country.

Producers who are always long until fully hedged should consider doing something according to their plan on hedging some of their 2011 corn. Soybeans are already bumping up at the bracket line which has been the target since going through the bracket line at $12.41, and I would sell all my speculative longs up in this area of the $12.91 bracket line. My next trade would be looking to buy them back as they come down to support areas, and if they do not, on to the next trade idea! Producers should do something at this level too because this is a chart resistance. I would do the same thing even if I think we can be another $1 higher in 1 month from now. How you approach taking profits or hedging is a personal thing and in the end it is you who your decisions affect. All I say to you is to avoid the pitfall of risking more than what you are going to make if right, and to make sure you have a plan if the market goes down instead. If you do not do this and I see it all the time, you will freeze in time and become a victim of what happens to the market, instead of being in control of what you do and looking for opportunities to safely improve your original trade or hedge.

Funds bought 16,000 corn contracts on Wednesday and as I said they are capable of doing anything. Ethanol has the burden of what the unknown result will be at end of this month as far as the tax credit being renewed. Throw in the funds and SA weather and you clearly see the "what if" that can affect the market. Without those unknown factors we would be trading at basically the same price every day. This is another way of saying that the reasons the market moves is unimportant to me, it is the price movement that is everything  to me, because that is what gives me trade ideas at chart levels or using the daily numbers daily, that causes my statement to go up or down daily. My approach is really simple, uses common sense and logic, and obeys the advantage of taking trades that have the odds in my favor. Have an approach, strategy, and plan, and then learn to execute your plan. Keep a journal and do not be afraid in what you learn about yourself, this is a great tool that helped me improve greatly in trading. Keep it real and you will see your weakness and will know what you need to improve, and the things that work should build confidence to work on your weaknesses.

Want to know what I think for tomorrow and going forward?The 8 markets now covered daily are Soybeans, Corn, Crude oil, S&P, 30 yr TBond, Gold, and Nat gas

My numbers usually are sent at least 12 hours (via your email) in advance of the next day open outcry session. Subscribers use them as best suited to their own needs and sometimes that involves the overnight trade.

 Find out why my subscribers from Canada, China, Czech Republic, Germany, India, Switzerland, South Korea ,Turkey  and the UK keep renewing this service.

HowardTyllas Daily Numbers & Trade Ideas cover 8 markets for less than $10 a day,

HowardTyllas Daily Numbers & Trade Ideas is designed to help you plan your trading strategies for the coming day.

$199.00 USD for each month, renewable monthly

HowardTyllas Daily Numbers & Trade Ideas $ 199.00

The weekly service is "Monday only" and comes out usually by Saturday morning so you can prepare for Sunday night and Monday's trade.

Weekly Service: 13 weeks for $129 total subscription fee.

 

Feel free to email with any comments or question you:  www.howardtyllas@howardtyllas.com

www.farmerhedge.com 

www.howardtyllas.com          

www.futuresflight.com 

 

           May Your Next Trade Be The Best                          

                     Howard Tyllas            

   BT

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.

 

 

 

Log In or Sign Up to comment

COMMENTS

No comments have been posted, be the first one to comment.

Receive the latest news, information and commentary customized for you. Sign up to receive Dairy Today's eUpdate today!

 
 
 
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