Jul 28, 2014
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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.

Grains Struggle to Rally off Lows pre USDA

Jan 08, 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.   

Grains attempted to follow through on yesterday's strength in soybeans, but fell flat today after a mixed, low volume day.  With the USDA report coming on Friday it could be that traders are now going to wait, but more likely this is a case of the market not knowing what to do until we get some fresh news to trade.

The last month has been very heavy on grains.  With a complete lack of export interest for corn, favorable South American weather, and improving weather in the US it has been hard to get too bullish on the grains.  The idea that we very effectively price rationed with the summer rally leaves us with the question of what happens if we have a half way decent crop next year.  What will it take to buy this demand back?  And, with South America on the verge of a monster soybean crop how much longer can we enjoy good sales in soybeans?  These are all thoughts that have been swirling around in my head for months now, and the answer to these questions are not popular ones.

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

I plan to dig into my pre report commentary on Thursday, but for now I would like to have a word or two about what we might see between now and the report.  It seems likely to me that in front of this report we could see some speculative and/or protective positions put on by fundamental traders.  After all, this January report has produced a limit move in 5 of the last 6 years.  But as far as the mostly technical fund traders one would think that they would not want anything to do with such a big fundamental influence.  Seeing that the grains have gotten very oversold and are holding above support I would think that we could see some profit taking on short positions from short term tech traders, or even some technical long positions.  But, so far any attempt at a bounce has been disappointing.

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

March Corn Daily chart:

March 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 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=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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