The Ted Spread
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 and Wheat Hold Support, Soybeans Fail at Resistance
Dec 13, 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.
Mixed markets today with soybeans attempting to rally on good export sales while corn and wheat try to extend to the downside. In the end technical levels were held today by all three.
Export sales for corn this morning were within the range of guesses but better then what we have seen in a few weeks. However, sales are still very poor overall especially for this time of year. The overall lack of demand right now makes it very difficult to get excited about how dry it still is or how tight the balance sheet is. The idea is that there is still time this winter to get some good moisture and if exports and demand and cattle on feed numbers remain poor the USDA will likely have to raise ending stocks at some point taking some pressure off of the tight balance sheet and alleviating the notion of price rationing. We certainly may be set up for another drought year next year, but the market probably can not get to excited about dryness until we get closer to the growing season. Really the only thing keeping corn from a downside breakout is the support from here to $7.00 and the relative strength in soybeans. However, we are not far away from talking about acreage and when we do start to get into that conversation we could find ourselves talking about how soybeans need to gain on corn to buy acres.
Soybeans had another week of great export sales. And now is the time if we are going to do it. The US will only be relevant in the global export market until South America is harvested and at the ports. South American weather continues to be good and is tempering the bullishness of strong export sales. If South America weather stays good through pod set then they will have a monster crop to sell at better prices and end users will do their best to wait on what they can. From a technical perspective soybeans were able to rally up to test 50-day moving average resistance for the second time in 5 trade days and failed yet again. However, the failure today was not as disappointing as last Friday when soybeans made a new recent high and hit the 50-day moving average at 1498 then proceeded to sell off 28 cents and close below the previous day's low posting a sweeping outside reversal day. So, with today's not as terrible failure soybeans leave the door open for another test of resistance.
Wheat was shocked on Tuesday's USDA report and is still under pressure from higher then expected US and world stocks. Wheat had ok export sales but was under pressure early anyway. The early pressure eased up mid day as Argentina lowered their production estimate. They are now projecting their wheat crop 30% lower then last year. Wheat certainly has its bullish news to talk about, but the over riding factor is weak global demand and large ending stocks. From a technical perspective wheat was able to manage a close above the psychological support at $8.00 and the 200-day moving average. This brought in some speculative, bottom picking buying in late. Wheat is on the verge of an extended downside breakout with the 200-day moving average acting as last ditch support. Wheat needs to hold here to stay in this longer term sideways pattern.
*** This is my last posting of the year as I will be taking the family to the islands. I wish everyone a very cheerful holiday, and only the very best for the new year. Thank you everyone for a wonderful year, words do not describe how much I appreciate the support. Talk to you soon. God bless...
Sign up for our Morning Ag Comments: http://www.zaner.com/offers/?page=17
March Corn Daily chart:
January Soybeans Daily chart:
March 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 above $7.00 and soybeans near $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 firstname.lastname@example.org
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
CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&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