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April 2013 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.

Is Lat Corn Planting Producing a Golden Opportunity?

Apr 30, 2013

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 took a little longer to develop then I thought, but here is the late planting rally.  We are at a historically low planting pace and after the drought we had in the US last summer it seemed likely that the market would be very sensitive to any weather issues.  We need a decent crop this year to take pressure off of tight corn supplies and any hiccup should be met with adding premium to the market.  In this case it also serves as an incentive to get the job done.  But is this a total change in trend?  Are we really going to loose a massive amount of corn acreage?

So far I do not think a huge amount of acres have been lost.  There is likely some acres in the northern states that will go unplanted or switch to soybeans due to their shorter growing season.  Right now my guess is 500,000 to 1,000,000 acres.  That number is likely to increase, but most of the lost or switched acreage will come out of fringe areas.  This may have a positive effect on the national average yield and could offset some of the lost potential of late planted corn.

If you look at where the rain is set to fall in the next few days it is mostly in areas that will still have some time to dry out and plant.  My biggest concern was that the northern areas would get huge precip totals after getting all that snow.  That really would have been a disaster (and in some localized areas is) and would have caused a massive amount of acres to go unplanted.

It also seems that the worst of the weather is behind us.  As temps get warmer drying happens faster.  I know that a lot of areas have a lot of drying to do, but it seems that spring has turned the corner.  I have spoken to a lot of guys out on planters in the last two days, and a lot of others doing field prep.  So far this planting pace ties the record low, but we can sure get it done fast these days.  Also, for many the later planted corn has preformed the best in the last three years.

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

The most interesting thing I have noticed in the last 24 hours is that Monday's limit up rally in July corn was done on high volume, but open interest declined almost 33,000 contracts.  This suggests that this rally was based mostly on short covering not new buying.  Typically this is not how longer term rally start.  Weather might have to get worse again to inspire new buying.  It is also disappointing to the bull camp that there has been no follow through after a limit up rally.  This could be a potential red flag for a reversal back to the down trend soon.

This rally has put new crop corn back to some more comfortable levels for producers.  I think we need to see this as it is - an opportunity.  This could be a short lived gift to take advantage of.  Chances are that we do get the crop in and with all the moisture in this weather pattern it seems like we could be set for a good growing season.  We don't need a 2.2 billion bushel carry over in corn to see lower prices.  Even a 1.4-1.6 billion bushel carry over will do the trick.  It certainly seems possible if not likely that this could be where we sit come harvest.

If you are looking for ideas or want to talk strategy feel free to give me a call or shoot me an email, you will find my contact info below the charts.

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

December Corn Daily chart:

November Soybeans Daily chart:

December Wheat 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 corn near $7.00 and soybeans near $14.00. 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=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 Start of a Rally in the Grains, or a Bounce to Sell?

Apr 25, 2013

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.   

Corn, wheat and soybeans have had a healthy bounce off of lows in the last 2 days.  Corn and soybeans just made new recent lows yesterday.  So is this change in momentum signaling a change in the market, or just a temporary corrective bounce on the way to new lows?

Weather is a dominant factor in grains right now.  A cold and wet spring is causing planting delays and fears of loosing planted acreage.  At the same time freezing temps have put stress on the wheat.  Wheat conditions are only 35% good to excellent as of Monday's crop progress report.  Early this week grains were under pressure because of a warmer dryer forecast offering opportunities to plant and relief to the wheat crop.  However, as the week has progressed the forecasting models have developed conflicting outlooks adding concern back into the markets.

If the cold and wet pattern hangs around for a while there could be a significant loss in corn and possibly even soybean acres.  At this point corn has probably lost close to a million acres in the northern growing areas.  If weather improves, a good amount of that could switch over to soybeans or sunflowers.  If not, some or all of it could be lost for the year.  If corn looses 1.5-2 million acres due to this cold wet spring it would have a significant impact.  However, keep in mind that a lot of these acres are what we call fringe acres and we do not expect the highest yields in these areas.  So, the loss in acreage certainly would cut into the production number, but could also raise average yield at the same time.

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

The bigger impact could be on soybeans.  If there is 1-1.5 million acres gained because we missed our window of opportunity in corn there could be a significant increase in production.  Here too this could have an impact on average yield in the other direction.  In the end the increase in soybean production is potentially very bearish for soybeans.  There is a huge amount of soybeans in South America that need to get moved.  If you throw a huge US crop on top of that you could see world soybean prices fall.

As far as planting goes there is a good chance that the worst of the weather is behind us.  Even though the forecasting models are not in full agreement on how the next two weeks plays out they do all look for warmer temperatures then what we have seen in the last few weeks.  Most likely spring will come and we will plant a crop.  Yes, there will most likely be some fringe acres lost for corn and some gained for soybeans.  But the drop in corn production probably will not put corn in tight balance sheet situation while the increase in soybean production could turn out to be quite bearish.

With the weather issues and uncertainty over the forecast I would think that we should see more of a bounce in corn, wheat and soybeans.  Until we are at least 50% planted in corn and the wheat conditions stabilize there should be concern factored into the market as incentive to get the job done.  However, we very well look back a few weeks from now and say we should have sold this bounce.

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

December Corn Daily chart:

November Soybeans Daily chart:

December Wheat 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 corn near $7.00 and soybeans near $14.00. 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=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 Year-Long Weather Market

Apr 23, 2013

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 April, and grains are firmly entrenched in a weather market.  Right now grains are transitioning from the bullish idea of lengthy planting delays to bearish thoughts of a warmer, drier forecast allowing for planting opportunities.  Is it early to be trading weather so closely?  I'll argue that we have been in a weather market since last December.

The dryness in South America two growing seasons ago and the US drought last summer have put a lot of pressure on global grain performance.  As such we started watching South American weather like a hawk last December.  At the same time we were talking about winter precip in the US in regards to recharging the drought depleted sub soils.  So weather has not really taken a back seat for some time.

Now the weather concern is late planting and if some of the northern growing areas will be able to get corn (or anything) planted in time.  But this is actually a bigger issue.  It now becomes likely that late planting means a late harvest at least for some.  This means that, aside from the normal summer weather market, weather will remain a big market factor well into fall.  At some point we will be worried about early frost and snow.  This also means that current ending stocks may need to be stretched further into the marketing year.  This could tighten balance sheets again, but it would seem that any major rally in old crop corn or soybeans would be met with imports from South America.  This also means that the September Corn contract will likely take on characteristics of old crop and September Corn options could end up being a great hedge against any new crop sales if we smell a summer rally coming on.

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

It seems to me that the markets could be getting a little ahead of themselves with this recent drop due to an improved weather forecast.  The fact remains that we still need to get seed in the ground and corn is only 45 planted.  Yes, if the current forecast pans out we could catch up quickly, but I would think there should still be some nervousness in the market until the job is at least 50% done.  Maybe it will take a change in the forecast to get a bounce, but hey - that's a weather market.

So, the weather market is here and has been here and will be here for a while.  When you have major weather events like the ones in the last year it raises the markets sensitivity.  This year we should expect the markets to be very sensitive after the drought in the US last year.  So buckle up everyone, it could be an interesting spring, summer, fall, ect... 

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

December Corn Daily chart:

November Soybeans Daily chart:

December Wheat 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 corn near $7.00 and soybeans near $14.00. 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=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.

Have the Grains Traded this Weather Yet?

Apr 18, 2013

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.   

Tremendous amounts of snow and rain have fallen over much of the growing area in the last week.  On one hand this goes a long way to break a drought, but the timing of it has planting progress well behind the 5 year average.  It seems that so far the market has not recognised the cold, wet weather as a threat.  This could all change dramatically in the days to come.

This cold, wet spring has been a sharp contrast to last year.  This time a year ago we were unseasonably warm and rolling out planting at record pace.  We also thought we were going to have record yield and record production due to the early planting, but we all know how that ended up.  This year it's cold, wet, and sloppy and the concern is that we will not get all the corn planted in time.  I think there are two things we can take away from this.  One, we will likely see some corn acres switched over to soybeans.  Two, whatever does get planted will have a good shot at a very good year.  Not only has subsoil moisture gone from none to a ton, but when you have moisture in a weather system like this it evaporates and feeds the cycle.  Hopefully this moisture in April will eventually regenerate as moisture in July.

So far the grain markets have been mostly oblivious to this weather.  Corn, wheat and soybeans have spent most of the week reacting to big moves in the outside markets.  By no means am I saying this should be ignored.  If in fact the US$ is poised to make an upside breakout and the bullish commodities cycle is turning bearish then it will have a profound impact on grains markets as a whole.  However, the more immediate concern probably should be if we can get a crop in the ground.  I do understand that for most areas there is still a good amount of time, but even now some northern areas may be running out of time and yield potential could be taking a hit everywhere.

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

I think it is reasonable to estimate that at this point 500,000 to 1,000,000 acres of corn may not get planted and this could go up dramatically if weather does not get warmer and dryer soon.  The old adage rain makes grain certainly holds true when its in the ground but until then markets should be concerned, and be adding incentive to get planting done.  With corn possibly loosing acres it would seem likely that soybean acres would benefit.  At this point I would think 250,000 - 750,000 acres could go from corn to beans.  This is big increase in bean acreage and could also be a big boost in production.  This is not a function of prices as South America has a massive supply of soybeans and US beans will face stiff competition going forward, but this is simply a function of opportunity.  So, while it may not be the most ideal situation to plant more soybeans it may be the less risky option.  Therefore if corn wants to keep acreage it should be adding risk incentive.

Today December corn was down 6 cents and November Soybeans were up 5 1/2.  This is the opposite of what we would expect if there is in fact a shift in acreage in the works.  This very well could be a situation where the market will need to play catch up sometime soon.  If so $12.25 could be a good place to sell new crop soybeans, and $5.40 might be a good place to lift unneeded hedges in corn.  Overall this moisture is a huge positive for the growing season, so what does get planted could have great yield potential but for now it should be seen as a bullish force in corn and a bearish one in soybeans.  I think beans should be sold sooner then later, and corn should be sold after 50% is in.

One final thought...  This kinda reminds me of late May of last year in the sense that I was having conversation after conversation about how dry it is and yet grain markets were still down.  This is when we were buying September corn 620 calls for 7 cents to protect our short Dec 660 calls.  A few weeks later the market was on its way to record highs in a hurry.  Sometimes it takes the rest of the market a little while to figure out weather issues.  This is where guys in the field have an edge.  I think this could be one of those moments.

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

May Corn Daily chart:

May Soybeans Daily chart:

May Wheat 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 corn near $7.00 and soybeans near $14.00. 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=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.

China v.s Late Planting

Apr 16, 2013

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 has been a wild and volatile start to the week for grains.  Yesterday, concerns over China's economy and bombings at the Boston Marathon had most commodity markets down sharply.  Today many markets, including the grains, did their best take back the losses.  New crop corn, wheat and soybeans struggled to get back to Friday's close but old crop came back well.  May corn even posted a sweeping upside reversal after a sweeping downside reversal yesterday.  So what does this all mean?

In the short term we could hope to see continued strength in the grains.  Most of this seems to be confined in old crop after getting over extended to the downside in recent weeks.  New crop may be able to follow higher, but at least today was not able to keep the pace.  I would think that the recent snow in Minnesota and the Dakotas and the continued cold and wet pattern in much of the growing area should offer support to new crop corn.  There may still be time to plant corn in places that got heavy snow, but the current weather forecast will need to hold up and planting will have to go quick.  Even if weather cooperates I think we could have lost 500,000 to 1,000,000 of corn acres.  This should be supportive for new crop corn and bearish for soybeans.  I'm not sure this has been traded into the market yet, and we will have to see how this unfolds in the coming days.

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

Longer term, almost all the news in the last 2-3 has been cause for concern.  The stocks report was a game changer, and the recent China economic news could be as well.  Not to mention there are still bird flu concerns in China.  The demand outlook for grains is becoming questionable at best.  This is not good considering there is talk of a 2.2 or larger carryover for corn this year and huge stocks of soybeans in South America.  Weather could certainly change the outlook for big stocks as it did last year, but we all have to admit the weather pattern this year is starkly different then this time last year.  Long term forecasts still suggest warmer and dryer patterns further out.  This is not necessarily a bad thing as long as it doesn't get too warm and too dry.  And, what do long term forecasts know anyway?  This time last year they were suggesting a near perfect growing season, and we all know how that turned out.

The bottom line is that if we pile a half way decent crop this year on top of slumping global demand we are going to get huge ending stocks in corn and add to the already large world stocks of soybeans.  Think about it this way, this time last year new crop corn was testing the $5.00 mark on the idea of 1.6 billion bushel ending stocks.  This year there is a lot of talk of well over 2 billion bushel ending stocks.  Now, we certainly have to get it planted first, but once we do...

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

May Corn Daily chart:

May Soybeans Daily chart:

May Wheat 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 corn near $7.00 and soybeans near $14.00. 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=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 Draws a Line in the Sand

Apr 11, 2013

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.   

The domestic ending stocks numbers for corn and soybeans and the April 10th USDA report were rather bullish vs. expectations, but the world numbers were really bearish.  It was a shock to some, myself included, that the USDA  only added 125 million bushels to the corn balance sheet and left soybeans unchanged after finding larger then expected March 1st stocks.  In hind sight though, this might be a typical USDA move.

Corn ending stocks came in at 757 million bushels.  This was a 125 million bushel increase over last month.  This is a huge month over month increase, but it fell well short of expectations after the March 1st stocks report came in a whopping 400 million bushels over expectations.  It seems likely that the USDA is looking to ease the market into larger stocks.  And, if that is the case 757 million bushels now becomes the line in the sand that the USDA will not go below.

We have seen it in years past where the USDA sometime in early spring gives us an ending stocks number and then builds on it in the reports to follow.  It seems like this may be the case again this year.  Some of the revisions they made in the US balance sheet seem justified, some do not, and some non-changes seem to stick out like a sore thumb.  For one, and increase in ethanol usage is questionable at best.  A very strong case could have been made for the USDA to decrease corn usage for ethanol.  For months now corn usage for ethanol has been running 2-4 million bushels a week below the previous USDA estimate.  There was a sharp increase in corn used for ethanol last week, but it could be premature to think this will continue.  It would seem that the USDA could have certainly waited on this one.

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

One of the most interesting aspects of this report was what the USDA chose not to change.  The USDA left the supply side of the balance sheet completely unchanged.  Production stayed the same as did imports.  I am not sure this is accurate.  It would make sense that a good chunk of the 400 million bushels that came in on the stocks report was due to either better then expected production or more then expected imports, or both.  Leading up to the stocks report there were lots of rumors of old crop Argentina corn coming in through the gulf.  I would think that in future reports the USDA will be increasing the supply side of the old crop corn balance sheet and therefore increasing ending stocks as well.

In the mean time there may be a window of opportunity here for corn, soybeans, and wheat.  The less then bearish numbers form the USDA report along with cold wet weather could allow for a short term rally in grains.  Delayed planting could mean lower yield potential, late harvest, and/or acres switched.  After the weather issues last year the trade should be sensitive to any weather related issues.

If a late planting rally does materialize, it might be a great opportunity to sell some better prices.  Once corn planting is 50-70% complete we are probably going to look back and say that this cold wet weather was just what the doctor ordered.  This year certainly seems much different then last year.  And, if we do have a decent growing season it is very likely that we will end up with massive corn ending stocks.  In the mean time, soybean and wheat world ending stocks are already pretty massive.  Producers should be thinking hard about hedging 2014 production.

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

For now, it seems that 757 million bushels is the lowest ending stocks number we are going to see for old crop corn going forward.  This certainly could now be the USDA's line in the sand that they will not go below.  If anything it will probably be going up. 

May Corn Daily chart:

May Soybeans Daily chart:

May Wheat 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 corn near $7.00 and soybeans near $14.00. 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=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

Are We Setting Corn Up for Failure?

Apr 09, 2013

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.   

As I look at the average trade guess for corn ending stocks going into the April USDA supply/demand report I have to wonder if we are setting the corn market up for another bearish report.  Two weeks ago the USDA gave us a momentous shock with quarterly grain stocks coming in 400 million bushels over expectations.  This means either we grew much more corn then we thought last summer, demand is much less then we were expecting, imports are much stronger then expected, or all of the above.

Now, going into tomorrows monthly WASDE report the average trade guess for old crop corn ending stocks is 812 million bushels.  This would be an increase of 180 million bushels from last months USDA estimate.  This is no doubt that this is a huge month over month increase, but shouldn't it be even more?  Where does the other 220 million bushels that we underestimated on the stocks report go?

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

Since the stocks report I have been saying that the full 400 million bushels will not find its way onto the ending stocks number.  With the sharp drop in prices that followed it would seem logical that the USDA would look at this as awakening some demand.  Based on price action the market seems to have priced a vast majority of the 400 million bushels going back onto the balance sheet.  But now we are looking at an average trade guess of 812 million bushels.  To me this is an average analyst guess, not an average trade guess.  I think the market could have factored in a 950 million bushel cary over number.

More demand certainly seems possible.  However, corn used for ethanol continues to fall behind the current USDA estimate by 2-4 million bushels a week.  Corn exports are continuously terrible historically.  And, if there was huge feed demand out there it should have been reflected on the stocks report.  The bottom line is that the USDA sees more corn out there, a lot more.

There was likely better corn production then anticipated last summer, despite the drought.  Imports were also probably stronger then expected over the last few months.  These changes alone could give us a number higher then the "average trade guess".  I was hoping the trade guess was in the low 900s so that there was a chance for a bullish report, but with these guesses I am worried we are set up for failure.

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

May Corn Daily chart:

May Soybeans Daily chart:

May Wheat 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 corn near $7.00 and soybeans near $14.00. 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=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

Are We Due for a Pre-Planting Bounce?

Apr 04, 2013

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 has been a tough week for grains, not that I need to remind anyone.  And, I for one am tired of talking about and hearing about the shocking numbers on the stocks report.  It's time to change the subject.  Unfortunately, we can not totally move on until after next wednesday's Monthly USDA report.  I will have more to say about that next week, but for now I would like to take a little break and talk about what else is going on in the market.  Could we be setting up for a little bit of a spring rally?  We could sure use one.

It seems that with how wrong everyone was about the stocks report last week we kind of overlooked acreage numbers.  Yes, acreage numbers are huge, but at least they were not as huge as some had feared.   Corn and wheat numbers came in right on top of the average trade guess and soybeans were a whopping 1.3 million acres below.  This again puts a lot of pressure on the upcoming growing season.

Speaking of which, we have all noticed the sharp contrast of this year's weather compared to last.  This time last year we were unseasonably warm and all excited about early planting.  Well, we all know what happened with that.  Maybe we should have seen what was coming.  Hind sight is always 20/20, but looking back I feel that more of us should have been concerned.  Now, this year its cold and wet in most areas.  I certainly think that might be a good indication of what is to come in the next few months and I do think it should be causing a different kind of concern for later this summer.  But, we have to get it in the ground first.

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

Even if the USDA increases the ending stocks on next Wednesday's report we still have relatively tight ending stocks and there is a lot of pressure on this year's crop.  If it stays cold and wet we could have some planting delays which has the potential to cut into yield potential.  Last year, early planting caused markets to move lower into planting.  This year should be more like most where we have a bit of a rally at least until we are 50-70% planted.  The question is what does the USDA have in store for us on this upcoming report, and can we get a rally even if it is as bearish as everyone is afraid of?  I think so.

Honestly, I don't think next Wednesday's USDA report is going to be as bearish as this recent drop in prices would suggest.  From what the market has done it would seem that we are expecting the full 400 million bushels of corn that came as a surprise on the stocks report to end up on carry over.  I do not see that.  the USDA should take into account the recent price decline and figure that it will awaken some demand.  Also, with the possibility of late planting comes the possibility of a late harvest which would extend the marketing year and add additional weeks of dependence on old crop.

IF there is a spring rally I still think it needs to be sold, for so many reasons that I have been hammering on for months now.  But I am really trying my best to be in a bullish mood, so we can get into that again later.  Feel free to give me a call or shoot me an email it you would like to talk about it, or would like to talk marketing strategy.  There is no better time to make a plan.

Lastly, I would like to thank everyone for all of the calls and emails lately.  Good or bad its great to know you are as passionate as I am.  And, I certainly love to know your reading.

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

May Corn Daily chart:

May Soybeans Daily chart:

May Wheat 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 corn near $7.00 and soybeans near $14.00. 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=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

As the Dust Settles - Remember One Thing

Apr 02, 2013

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.   

The last two trade sessions saw the largest two day decline in corn prices.  Today grains settled down a bit and closed mixed to unchanged.  It seems that the drought bulls have been flushed out of the market and the selling panic has subsided.  It is time to take a much needed break from watching the screen for the better part of 24 hours a day.  But as you do, take some time to reflect and look forward.

Many producers were caught off guard buy the super bearish USDA report, shoot everyone was.  The fact remains - The sharp decline in old crop prices hurt if you didn't have it all sold or protected.  Events like this tend to make us want to bury our head in the sand and try to forget the whole thing.  To that end I do feel like after today I finally have all my ducks in a row and I actually plan on getting some sleep tonight.  But, this is not a time to busy yourself with other chores and forget about the markets.  Now more then ever we all need to think about what just happened and where we going from here.

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

This USDA catastrophe certainly does not inspire enthusiasm to watch the markets or make plans for the future.  If you had unprotected or unsold old crop corn the best we can do right now is maybe buy a cheap put and sit and wait to see if prices get better in the last days of the marketing year.  But we really need to be thinking about what to do with the crop we are all about to dedicate the next few months of our lives to.  The bottom line is that although May and July corn took a major thumping, the December and beyond contracts fared far better comparatively.  The fact of the matter is that December corn is only about 30 cents off pre report trading.  I know saying only 30 cents is a hard pill to swallow, but lets look at the bright side here.  Lets look at reality.

$5.30 plus corn makes money.  $12.50 soybeans make money.  $7.00 wheat makes money.  Now is a time to take a long hard look at what happened this last summer.  We had a major drought and we either ended up price rationing far better then anticipated, had a far better crop then anticipated, or imported far more corn then anticipated.  This quagmire of the last two days should not be lost on anyone, all signs point to grains testing the low ends of the price spectrum in the coming years.  With huge supplies in South America, larger then anticipated beginning stocks for next year, a questionable global economy and sagging demand the outcome seems inevitable.

Do not fall victim to complacency.  Don't bury your head in the sand too long.  All is not lost, at least not yet.  Now is the time to be planning for the future.  What happened this year is a wake up call and it highlights the fact that good prices and good profit margins in grains need to be protected for years to come.  We need to be looking for opportunity to fortify our livelihoods rather then licking our wounds.  It is time to dust ourselves off and get on it.  Maybe not today, maybe not tomorrow but soon - very soon.  American Farmers are the strongest people in the world, and don't ever forget it.

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

May Corn Daily chart:

May Soybeans Daily chart:

May Wheat 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 corn near $7.00 and soybeans near $14.00. 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=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

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