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October 2012 Archive for 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.

Corn Still Holding Support... For Now.

Oct 30, 2012

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.   

For the 3rd day in a row corn closed right on top of its 100-day moving average.  So far this support has held very well as corn has not had a close below it since June 6th.  And, corn has also been holding the recent low of $7.32 (December) as we have touched it 3 times and not broken below.  However, the bounce of these key support numbers has thus far been underwhelming and if corn can not put more distance between itself and this support then eventually the door may open for a move to test $7.00 or even the gap between $6.75 - $6.85.

Fundamentally it is hard for me to wrap my head around the bullish argument.  Demand seems very week form all sides.  Supply is tighter then in years past but that has been known now for some time and that story might be old news.  Before we can get re-excited about a tight supply situation we may need to go down and buy some demand back first.

I have a trade recomendation in corn that I really like that goes through the election and the next USDA report, let me know if you would like the details.

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

Soybeans have broken their 100-day moving average, in fact this has now become a strong level of resistance.  Soybeans tried to break out over the 100-day moving average again early last week but failed.  This was followed by a sell off that was capped by Monday's 34 cent decline.  Soybeans today fought to take back some of yesterday's losses but closed closer to the lows than the highs leaving beans up 7 cents.  Ultimately, soybeans failed to get back over even the 10 and 20 day averages.  This can be called a "dead cat bounce" after yesterday's sharp sell off.

Soybeans might have the best fundamental story right now as the US is the only real supplier at the moment.  Last week beans were supported by rains in South American hampering planting progress.  Slower planting progress in South America could mean that the US will have to carry world demand further but now the forecast has dried out and planting has resumed and those rains last week helped charge subsoil moisture.  Soybeans could certainly see a sharp rally if a big importer would come in and make some big purchases but I really think that those big purchases only happen if there is a problem with the SA crop.  If weather continues to look good and the crop progresses on schedule it is likely that most end users are going to only book what they absolutely need to get them through the SA harvest and then stock up on cheaper SA beans.

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

With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 new crop corn above $7.00 and new crop soybeans above $15.00. 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=Seifried

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

Grains Back Off, Corn Closes Below Support

Oct 25, 2012

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.   

Grains were on the defensive today with front month corn, wheat and soybeans all closing lower on the day.  Export sales this morning were solid for wheat but disappointing for corn and soybeans.  The biggest take away from the export sales report is the cancellations from China and unknown destinations which are also likely China.  Corn had cancellations of 120,300 mt from China, and soybeans had 303,400 mt cancellations from unknown.  This indicates that the recent and small rally in grains was enough to price out some export demand again.

The soybean chart still looks ok for a bounce as soybeans weigh the bullish short term situation with low US stocks and nowhere else to go vs. the bearish long term situation with South America looking like they could have a monster of a crop.  Soybeans could stay very volatile as we get deeper into the South America weather market.  Brazil will be going through pod setting in January and February.  If all goes well, this could put in highs for soybeans at least until we get into the US growing season.  Also, I have to believe that in the near term China is looking to buy as little amount of US soybeans as possible as long as South America looks good because they know that if they are patient they may have the chance to buy soybeans at a $2-$3 discount in a few months.

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

The corn chart looks like we could be starting to roll over again.  We do have support just below the corn market at $7.32, but after that we have a clear shot down to September lows of $7.05.  Today we closed below key mowing average support and the pivotal $7.50 cent mark.  Fundamentally, export demand is almost nonexistent right now and trade expectations are for a bearish increase in yield and ending stocks on the November USDA report.  Lat Friday's Cattle on Feed report showed September placements at 81% of last year, this is the lowest September placement number since 1996 and the lowest number of cattle on feed since 1996.  Corn had enjoyed support from firming soybean prices but reasserted its bearish enthusiasm today.  Corn still has a gap in the chart between $6.85 and $6.75 that was left over the July 4th holiday and this could be a likely downside target on of before the November report.

Overall grains could stay volatile through next years growing season as we watch South American weather closely and we watch our weather looking for replacement of subsoil moisture.  But for now it seems that the bulk of the bullish news might be behind us.  Demand for soybeans is ok at these prices but this may be short lived as we move through the South American growing season.  Demand for corn is noticeably struggling with consistently poor export sales figures and the lowest September cattle placements since 1996.  For my money, I have to be concerned about the downside potential at this point and I need to be looking out for the next 2-3 years.  the bottom line is that we could be on or two solid growing seasons away from swinging prices to the other extreme.

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

With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 new crop corn above $7.00 and new crop soybeans above $15.00. 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=Seifried

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

What Did the Grains Tell Us Today?

Oct 23, 2012

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.   

Very mixed markets today with corn and wheat closing lower and soybeans higher.  Soybeans ending the day up 7 cents doesn't look like much at face value, however a 25 cent rally off the lows is pretty impressive especially after violating support levels early.  Outside markets were also very heavy today coming from uncertainty over elections and an overall lack of confidence.  Crude oil at one point was down $3.00 a barrel but had taken back $1.20 by the close.  Equity and metals markets were also sharply lower.

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

The overall commodity liquidation today had the grains on the defensive early.  A half hour into the pit open it looked like corn and soybeans were going to break key support levels and turn the charts negative.  Both bounced back from support and soybeans posted the highest close since October 1st.  Better cash bids for soybeans sparked the rally and rumors of China buying fed it.

Overall corn is still in limbo here trading below resistance and above support.  Pricection in corn and what seems negative, but strength in soybeans seems to be preventing a sharp break like we saw in many other commodity markets.  Soybeans do look good on a chart and have potential for a breakout to the upside but this could prove to be a difficult task with fund liquidation everywhere.

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

With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 new crop corn above $7.00 and new crop soybeans above $15.00. 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=Seifried

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

Protecting Your Growth Strategy

Oct 18, 2012

 

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.   

 

It is pretty common for one extreme in market prices to be followed within a year or two by the opposite extreme.  After record high prices in Corn and Soybeans this year it seems very possible that at some point in the next two years markets could go to the other extreme.  Due to inflation I do not think record lows are possible, however prices could go substantially lower then what the market is currently thinking.  If this scenario does play out it will become a case of those who have and those who have not.  With this in mind I want to touch on producers strategy for growth over the next few years.

Corn and soybean prices reacted with record highs this year after a sub-par growing season last year followed by a devastating drought this year.  Coming into the growing season this year we had thoughts of big ending stocks based on record planted acreage for corn and big South American soybean crops.  As it turned out good crops were put under tremendous stress and prices reacted accordingly.  With ideas of shrinking ending stocks and some analysts even fearing negative carry overs, corn and soybean prices moved into price rationing mode. When markets price ration they aim to do two things - curtail demand to spread out the smaller supply and, encourage more production of the commodity that is scarce.  In the case of corn and soybeans the USDA has certainly indicated that demand has fallen sharply at current price levels, and thoughts for next years planted acreage suggest records for both corn and soybeans not to mention that South America is already planting record acreage with what looks to be a very beneficial El Nino weather pattern.

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

In this current global economic climate it is easy to destroy demand and difficult to create it.  Consumers or end users will do their job and look for viable substitutes to replace higher priced options in order to survive.  Pressure needs to be exerted to make a change, and in the case of corn and soybeans pressure was exerted in the form of high prices this year.  To get consumers to make the switch back pressure may need to be exerted in the opposite direction with low prices in effort to "buy" demand back.

So, the concern for producers must be that if we do go through a growing season with even mediocre or average success on what is now lower demand then ending stocks could grow to historically large levels.  If this comes to fruition then markets will seek to correct the oversupply much in the way price rationing seeks to correct a shortage, only with the opposite effect on prices.

The question every grain producer has to ask themselves while we still have high grain prices is - What are my plans for the future?  As I see it, there is a good chance that this year of record high prices breeds a situation that will put many producers under tremendous pressure.  However, this scenario also opens the door for tremendous opportunities as well.

In my mind we are moving toward a crossroads for those who have and those who have not.  By that I mean those who have prepared for the future and taken advantage current opportunities, and those who have not prepared and simply reap the profits of selling high prices for whatever they were able to produce for this year only.  There are things that need to be done in times of high prices, such as this, if one wants to survive and prosper.  Most of those things require foresight and planning.  This may not be the time to go out and bid on record high priced farm land.  This may not be the time to buy all new equipment if it means maxing out your credit line.  This certainly may be the time to reinvest profits into your operation especially if it is putting you in a better position to grow in the future and covers future operational costs.

At this very moment in time, one of the key components is a well thought out hedge strategy going 2-3 years into the future.  Strike while the iron is hot as they say.  Lock in profit margins while they are good as I say.

With rising input costs and higher and higher land values, grain producers break even point has continued to rise.  And, the market is always conscious of this.  In times of shortage the gracious market moves to reward producers and encourage them.  In times of glut the vengeful market moves to push prices below breakeven and push weak producers out of business to cut supply.  The trick is, and the reason futures markets were established is to allow savvy producers to lay off the risk of a vengeful market and take advantage of gracious ones.  The point is that one of the biggest determinators of who will be a have and who will be a have not when grain prices swing back to lows is the ability to employ a proper hedge strategy and lock in profits while they are available.  Especially for those looking to expand and grow their operation in the next few years because, lets face it, it is a world of survival of the fittest and just as some will suffer from low prices others will find opportunity.

Opportunities will arise for those who have locked in profit margins when those who haven't will struggle to break even.  Those who struggle to breakeven will need to abandon thought of growth and in many cases may also be forced to cut their current operations while those who have locked in profit margins will have the ability to reinvest into the business.  Amongst other things, land may be a key part of what struggling producers will need to part ways with.  Weather it comes in the form of selling land to free up funds or giving up rented land to reduce input costs, one way or another thoughts of growth will fade to hopes of survival for some.  Furthermore, if this is happening on a wide enough scale, the advance in land prices could retreat providing fantastic opportunity for those who can manage the investment.  This is growth strategy realized for those who have prepared.

For those looking to expand their operations in the next few years it is an absolute necessity to have a hedge strategy in place that goes out 2-3 years.  It is necessary to lock in profit margins while they are favorable.  Hedge strategies are an essential piece of the growth puzzle.

One concern of using a hedge strategy that goes out 2-3 years is cost and margin, another is opportunity cost.  Both of these issues can be addressed using option strategies.  For example, Window strategies can keep cost and margin requirements down while allowing for some upside potential.  Here at Zaner we work individually with our clients to develop and customize hedge strategies based on their specific needs.  Markets can be ruthless and function with no heart, discrimination or mercy.  We would like to help you make sure you have a plan in place to make sure you don't end up a have not.

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

With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 new crop corn above $7.00 and new crop soybeans above $15.00. 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=Seifried

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

Where Is the USDA Rally?

Oct 16, 2012

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.   

 

What a train wreck of a USDA report.  Even though I held on to my shorts and trusted my November 750 corn calls to protect me, I was really looking forward to selling $8.00 corn again.  The tightest corn carry over we have seen so far this year should be enough to test $8.00 right?  Well, it is certainly not acting as such.  Thursday's low represents key support and we have not yet seen a close below this key level but things are not looking good. 

Yesterday we managed a close below both the 9-day and 20-day moving averages, and today we rallied up to test them as what was support has now become resistance.  This attempt at a rally to get back on track ended with corn up one measly cent.  Again, key support remains in tact, but today's failure to get back above moving averages is not a vote of confidence.  I am still holding my November Corn 750 calls to protect my short position, but it is looking more and more like I will not need them after all.

Soybeans looked good this morning as news of to cargos sold to unknown woke the bulls up with a smile.  The attempt at a rally after partially closing the gap left over the July 4th holiday looked strong for a moment when we were up 23 cents but faded into the close leaving beans up only one and a quarter of a cent for the day.  I am not sure how to look at this any way other then disappointing.

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

Upside might still be limited for the time being.  Corn and soybeans could certainly find more producer selling on rallies as the harvest is still a factor and prices are good.  And, there is a side of the trade that thinks that the USDA is now 3-6 bushels short on corn yield.  Informa in particular is using a 127 yield, while the USDA is at 122.  By the way, good job informa for pegging the USDA soybean yield at 37.8, dead on.  There is a good chance that when we see the final USDA harvest numbers in November that the corn yield ends up quite a bit higher.  If that November report is as bearish as I think it could be, and El Nino holds up in SA our post-harvest bounce could be very disappointing.

New highs might have to wait until the end of the growing season when the bins are running dry.  Even then it may be dependant upon a bad South American crop and new weather concerns for our growing season.  That is too many what ifs for me.  I am looking at this failed USDA rally as a red flag to get some good pricing as best as I can in the next few weeks.  Give me a call or shoot me an email if you would like to know what my strategy is.  Thanks for reading.

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

With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 new crop corn above $7.00 and new crop soybeans above $15.00. 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=Seifried

When Does Weather Matter: http://www.zaner.com/offers/?page=6&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

The USDA Gives Corn New Life, Soybeans Try to Follow

Oct 11, 2012

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.   

Don't look now, but corn and soybeans were able to sustain a rally today.  Damn the torpedoes the USDA to the rescue.  However, somehow corn never did reach limit up even though it spent the last hour and a half no further then 6 cents away from limit and soybeans closed almost 20 cents off the highs.  Regardless, this report could have changed the tone in the grains markets for now. 

Today's report gave new wind to the bull sails as we saw the lowest carry over number for corn since this drought of a growing season.  The bull case has to now be that we were able to make record highs 75 cents above where we are now on a USDA balance sheet that was no where near as tight as this one.  On top of that, throw in a larger then expected quarterly draw down in the September 1st stocks report and we can argue that the USDA is still significantly underestimating demand.  For soybeans the bull case is a little tougher because it might be tough to justify new highs on higher US and world ending stocks.  But, here too we can certainly argue that the USDA is still underestimating demand despite the increases (particularly in exports) they made this month.  The best bull case for soybeans might be a "me too" argument, and the fact that supplies will be tight and in need of ration until we know for sure that South America has a crop.

When Does Weather Matter: http://www.zaner.com/offers/?page=6&ap=tseifrie

This report could find at least few days of follow through to the upside even though corn could not muster limit up and beans closed off the highs.  The tightest corn carry over so far should be enough to test $8.00 right?  I think so, but upside might still be limited for the time being.  Corn could certainly find more producer selling on rallies as the harvest is still in progress and prices are good.  And, there is a side of the trade that thinks that the USDA is now 3-6 bushels short on yield.  Informa in particular is using a 127 yield for corn while the USDA is at 122.  By the way, good job informa for pegging the USDA soybean yield at 37.8, dead on.  There is a good chance that when we see the final USDA harvest numbers in November that the corn yield ends up quite a bit higher.  If that November report is as bearish as I think it could be, and El Nino holds up in SA our post-harvest bounce could be very disappointing.

Maybe it's a good thing corn never made limit up because last time there was very little follow through to the upside.  For now, it certainly looks like we could see some higher prices in the days to come.  I am not sure that this balance sheet is enough to make new highs however.  New highs might have to wait until the end of the next growing season when the bins are running dry.  New highs could also be dependant upon a bad South American crop and weather concerns for our growing season.  That is too many what ifs for me.  I am looking at this USDA bounce as a good opportunity to get some good pricing in the next few weeks.

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

With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 new crop corn above $7.00 and new crop soybeans above $15.00. 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=Seifried

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

Grain Rallies Have a Hard Time Holding Water

Oct 09, 2012

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.   

For the second consecutive day grains tried to rally early only to find selling pressure into the close.  The price action for corn and soybeans in particular seems weak as markets gear up for Thursday's USDA report.  Even with a slew of bullish news coming from China (yes, I said the magic word - China), grains could not hold early gains.  In an effort to coordinate global easing efforts China announced that they were going to add what would equate to over 40 billion dollars to their economy which means they can buy lots of beans.  They also lowered import tariffs for grains which make them cheaper to buy.  And finally, there were of course rumors that China was looking to buy US beans.  Despite the ever bullish China presence, grains were sagging by the noon hour as focus shifted back toward the report.

Average trade guesses for this report are suggesting a bearish report for soybeans and a bit bullish for corn and wheat.  However, the range of guesses for corn ending stocks is exceptionably wide, almost 400 million bushels from the high to low guess, meaning that the trade really does not know what to expect.  Everyone is trying to balance the lower then expected September 1st grain stocks report with some higher then expected harvest yields.

When Does Weather Matter: http://www.zaner.com/offers/?page=6&ap=tseifrie

I sit on the side of the fence that is looking for the USDA to increase ending stocks for corn.  However, I am not sure if it comes in this report or the next.  Given how aggressive the USDA has been in making changes in the past few months the trend would suggest that they want to make the changes on this report.

The way I am looking at it is if you subtract the 200 million bushels in ending stocks that we were short on the Sep 1st stocks you would be looking at a 533 million bushel carry over for 2012-2013.  However, when you add in a higher yield number that should offset that and maybe even then some.  If I use Informa's current yield estimate of 127 it would add another 477 million bushels to production.  Interestingly enough...  533 + 477 equals a cool 1 billion bushel carry over.  Now, I certainly think that the higher then expected drawdown we saw on the Sep 1st stocks report suggests a higher demand number then what the USDA is currently using so that will cut into the carry over again, but I am looking for the USDA to settle at around a 820-840 million bushel carry over.

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

So, my guess is currently above the highest posted trade guess at 815 million.  As mentioned earlier, I am not sure how many of these changes the USDA makes on this report, but these are the numbers I am expecting to see by the November report.

With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 new crop corn above $7.00 and new crop soybeans above $15.00. 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=Seifried

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

Soybeans Bounce Off Lows, Corn Struggles to Extend Rally

Oct 04, 2012

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.   

Soybeans rebounded off of lows today after twice testing the $15.00 level yesterday.  Soybeans had been down 97 cents since last Friday's close before bouncing off of yesterdays lows.  Corn in the mean time had held very well in the face of a strong sell off in soybeans, however with the soybeans being higher today the rally in corn has thus far been widely disappointing.

Export sales this morning were better then past weeks, especially for corn.  Also supportive were some private estimates coming in below the current USDA estimates.  This has been going against the recent trend of higher production estimates.

When Does Weather Matter: http://www.zaner.com/offers/?page=6&ap=tseifrie

For what it is worth, I am looking at this attempted rally in corn and I am disappointed with the results thus far.  I believe that there is a good chance that the USDA gives us a bearish surprise on next weeks Corp Production / Supply and Demand report as I do not think that the USDA will cut ending stocks as much as the trade expects after the lower September 1st Grain Stocks Report from last Friday.  To me this bounce in soybeans is meant to be sold, and I will also look to sell corn as this rally momentum continues to fade.  Overall, I think the limit up move in corn last Friday, and the (all be it limited) ensuing rally is a gift for producers to price out at better prices before we get back to making harvest lows.

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

With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 new crop corn above $7.00 and new crop soybeans above $15.00. 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=Seifried

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

Corn and Soybeans Have Fundamental Differences

Oct 02, 2012

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.   

Last Friday the USDA sent a shock through the grains markets with their stocks report.  It was seen as very bullish for corn and that became the driver to end the week.  Soybeans followed corn after it locked limit up as traders felt the need to buy something but the start of this week has been a very different story with soybeans over 70 cents lower in two days.

Overall, I saw the need for a technical bounce in grains.  We had momentum studies showing a extreme oversold condition in corn and soybeans (not so in wheat), and the sell off highs had extended to the lower limits of Bollinger bands.  A bounce back to resistance was due.  However, corn and soybeans sure have handled this differently.  It seems unlikely that row crops will spend an extended period of time moving in opposite directions, but it is tough to tell if the weakness in soybeans or the relative strength in corn become the driver in the short term.  Soybeans have gotten oversold again in a hurry and could be due for a bounce which could allow corn to take a better shot at a rally.  As seen on the Daily chart below, corn is holding below the 20-day moving average but if it can break through it could test resistance at $7.89 1/2 or second resistance at $8.06 1/2.

I am currently using a November option strategy to protect short hedges or as a spec play.  Call or email for details.

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

Longer term I am skeptical of this rally in corn.  I do not believe that because 2011-2012 ending stocks were lower by 200 million bushels that the USDA is just going to discount their current 2012-2013 ending stocks estimate by the same amount (which is apparently what the trade believes).  I think better then expected harvest yields and continued dismal exports can offset much or all of that.  For now we still have big downside targets in both corn and soybeans in the form of chart gaps that occurred over the 4th of July holiday.  For December corn the gap is between $6.85 and $6.76, for November soybeans the gap is $14.93 to $14.78.  Soybeans may get there very soon if they continue the way the have the last two days, and corn could catch up in a hurry if next weeks USDA report is a bearish surprise.

When Does Weather Matter: http://www.zaner.com/offers/?page=6&ap=tseifrie

With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.

December Corn Daily chart:

November Soybeans 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 new crop corn above $7.00 and new crop soybeans above $15.00. 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=Seifried

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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