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November 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.

Will Grains Fail at Key Resistance?

Nov 29, 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.   

Grain took a break from the rally off lows today with March corn ending down 5 1/4, January soybeans up 1 3/4 and March wheat down 5 3/4.  Strong (but volatile) outside markets and more rain in Argentina offered support, but poor export sales and technical resistance added pressure.  Corn, soybeans and wheat are all at a bit of a crossroads here as they run up against key support levels.

As per usual this time of year, there is a bit of a lack of grain fundamental news but the news that we do have (other then wet weather in Argentina and dryness in the plains) is mostly bearish.  Export sales were dismal again this morning.  Sales continue to be disappointing and well below what we would expect to see at this time of year.  The US lost out on the Algerian wheat tender with France earning the bid.  Cattle on feed numbers are at the lowest levels since 1996.  Ethanol production is down while stocks are higher.

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

Export sales for corn are 45% behind where we were a year ago.  The USDA has balanced in a 25% decline.  So, here we are at the peak of our export season and we are way, way behind where we need to be to even export 75% of what we did last year.  This could translate into another reduction by the USDA for corn used for export.  Wheat is 10% behind same time last year and the USDA is currently expecting a 5% yearly increase.  Soybeans are 29% ahead of last year!  And, the USDA is expecting a 1% decline!  But, and its a huge but, if South America ends up with the monster crop that they are on track for we may not sell a single soybean after April as SA soybeans flood the global market at a $2.00 discount.

The weekly ethanol report showed that production was down 1% from last week and 13.7% from last year while stocks were down 3% from last week but still up 7.6% from last year.  This is showing us that demand for ethanol is lagging and therefore demand for corn for ethanol is as well.  Corn used for ethanol production last week was 84.32 million bushels compared to the 86.64 weekly average needed to reach the current USDA projection.  This has been a trend, in fact since Sep 1st there has only been one week that was solidly higher then the average needed to hit the USDA target, and that was in early September.  If this trend continues, the USDA could need to cut demand for corn used for ethanol by 75-100 million bushels.

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

From a technical perspective corn, wheat and soybeans are all rallying into key chart resistance.  As illustrated on the charts below, corn and wheat face the toughest challenge of getting back up and over the 100-day moving averages.  If corn and wheat fail to break and close over it then this rally off lows could be coming to a close.  If they are able to convincingly close above however we could get a breakout move to the upside.  Honestly, this may spur more export demand for corn then a drop in prices.  Just like producers are reluctant to sell on rallies because they figure they can sell higher tomorrow, end users may need a kick in the behind to pony up and pay for $7.50 plus corn.  There is no better buy trigger then the fear of higher prices.  But, for now I am just not sure if the fundamental picture is bright enough to push these markets up and over key resistance.

Outside markets continue to be a factor.  It seems markets move whenever anybody farts in Washington.  I feel that the fiscal cliff will get resolved and that although markets may embrace that at first glance the hard truth of the matter is that we will have had to give up much too much to make it happen.  Either way the economy gets hurt and in my mind its really just a question of how bad.

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 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 Continue to Rally off Recent Lows

Nov 27, 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 continue to post gains after putting lows in earlier this month.  Today corn was up over 12 cents with wheat and soybeans well over 20 cents higher.  There is little in the way of new news after the holliday trade.  Japan did buy some US wheat today, and there continues to be weather concerns in the US and South America.  The wheat conditions, especially in the plains are a concern as this the lowest rated crop in recent years.  In South America too much rain is causing planting delays.  This has had a bullish effect on the soybean market because the delay could be widening the window of opportunity for US soybean exports, however rallies driven by "too wet" conditions are rarely long lasting and if the rain continues to fall it will be very beneficial to the crop that has been planted.

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

The macro economic picture continues to be fuzzy with continued issues in Europe, global unrest, and the US fiscal cliff.  Feelings on these matters have gotten a little more warm and fuzzy in the last few days but none of these problems have gone away.  I assume that the macro economics will continue to be a factor in the grain markets for some time and will need to be watched.

The rally off of lows looks to be mostly corrective in nature.  If this is the case it could be providing producers with some good pricing opportunities.  We are not getting too aggressive quite yet as we wait to see the extent of this strength, but will do so on signs of weakness.

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:

January 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 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 Continue to Bounce off Recent Lows

Nov 20, 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.   

The grains continued their bounce off of recent lows today in choppy nervous trade.  There was little news to go on this AM, however there were some rumors of interest of US soybeans out of the Pacific Northwest.  This may have helped the soybeans come back from double digit losses in the night session and lead the grains higher on the day.  Aside from that the bounce has been seen by most as being technical in nature.  Wheat and soybeans had been in a very oversold condition and corn held recent lows again on Friday sparking some bottom picking buying interest.

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

The macro economic picture continues to be fuzzy with continued issues in Europe, global unrest, and the US fiscal cliff.  Feelings on these matters have gotten a little more warm and fuzzy in the last few days but none of these problems have gone away.  I assume that the macro economics will continue to be a factor in the grain markets for some time and will need to be watched.

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

The rally off of lows looks to be mostly corrective in nature.  If this is the case it could be providing producers with some good pricing opportunities.  We are not getting too aggressive quite yet as we wait to see the extent of this strength, but will do so on signs of weakness.

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

December Corn Daily chart:

January 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 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

Quiet Down Day in the Grains, More to Come?

Nov 15, 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.   

Quiet trading and tight ranges today for the grains, but I think today tells us more about this market then the sleepy day would suggest.  It really was like watching corn grow today.  Low volume, slow price action and no news made it difficult to watch the screen all day.  The charts however do give us some signals today.

As far as bounces go this one has been underwhelming to say the least.  Soybeans needed a bounce to correct the extreme oversold condition that developed in the last 2 weeks.  Corn wanted a bounce off of the old September lows and the psychological support at the $7.00 mark. Wheat has a bit of a bullish story with crop conditions at or near record lows for this time of year.  But none of this has thus far amounted to much follow through to the upside.  So, grain bulls have to be disappointed to say the least.

What's more is that there seems to be some large funds out there that are looking to get away from risky commodities.  Many of these funds were aggressive buyers in the run up during this drought driven summer rally.  The positions they hold are likely getting back to breakeven or worse and they were looking for a bounce to get out.  The bounce has not been much to speak of so they may become more aggressive sellers on weakness going forward.

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

From a technical perspective the chart action today produced some hints of fresh new sell signals.  Soybeans managed to close down 17 cents in Jan and below yesterdays low.  Corn closed below Tuesday's high which was had been a buy signal until it got negated by today's action.  Wheat tested and held Monday's low but produced the lowest close since July 11th.  The charts are looking very prone to further weakness at this point.

Fundamentally, there is little in the way of news to get the bull camp excited.  Exports remain poor especially for corn.  Cattle on feed numbers are the lowest in years (we will get a fresh look at this on tomorrow afternoon's Cattle on Feed report).  Ethanol plants are running a little or negative profit margins.  And, South America sure looks like it will continue to get the benefit of an El Nino weather pattern.

Now, South America did have some planting delays due to wetness so I would like to briefly touch on what that means for prices.  First off, as we all know late planting can mean a reduction in yield potential but the benefit of good subsoil moisture and a wet weather pattern can offset some of that.  Second, later planting usually means later harvesting and this could keep the US crops in the mix for exports longer then originally expected.  Finally, there could potentially be a shift in acreage toward soybeans.  This may be slightly bullish for corn but really very bearish for soybeans.  The bottom line is that SA will have record planted acreage this year, and if this El Nino weather pattern holds up they will have a monster.  The late planting certainly has an effect on crops and markets but let's face it, usually when we rally row crops on the idea of being too wet that rally is short lived and followed by a sell off.

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

All things considered, it is important for producers to take a serious look at doing something to protect prices going forward (if they have not already).  The concept of even a mediocre US growing season on top of current demand is scary.  I plugged in a 151 average yield (10 below trend line) on 97.1 million acres (Informa's forecast) and a modestly improved demand side and I came up with a 1.247 billion bushel carry over.  If that story becomes a reality then we could see prices swing back toward the lower extreme.  The fact is that we are one good growing season away from seeing a 3 in front of corn, and everybody needs to be thinking about what that means for them and what they can do about it.

 

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

December Corn Daily chart:

January 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 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 Not Sure Which Way to Turn on Turnaround Tueasday

Nov 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.   

Personally, I was disappointed with the lack of changes on last Friday's USDA report.  However, it seems we did not need a flood of new US news from the USDA to get these markets to move.  The world stocks estimates did the trick but it was a bit of a delayed reaction.  The large increase in world ending stocks, especially in soybeans and wheat, highlight the concern of slowing global demand and the potential for a monster soybean crop in South America.

The grains started today higher from the night session showing us a classic "Turnaround Tuesday", but shortly after the pit open the trade turned again and started to sell off.  The sell off was also short lived as Jan soybeans broke $14.00 but couldn't find any follow through and corn broke yesterdays lows at $7.12 1/2 but also could not find any follow through.  So in fine Turnaround Tuesday form we turned once again rallied into the close.  The positive closes in corn in beans after making new recent lows leaves us with a mild buy signal however with poor demand for corn and good weather in South America the fundamentals still seem to be pointing down in the long run.

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

With corn closing up 5 cents, soybeans up 4 and wheat down 6 3/4 today does not look like much from the settlement prices, however the range was big and this Turnaround Tuesday (also Taco Tuesday in some circles) could be forecasting a more bounce to come in the short term.  Longer term the outlook is a bit less bullish.  Large global end users for soybeans will be watching South American weather closely and unless some issues develop I would imagine that they will buy as little soybeans as possible until the flood of cheaper SA soybeans hit.

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

Corn still has terrible demand figures and even with this mornings 156k MT sold to "unknown" exports are very poor at a time of year that they should be very strong.  We will se new cattle on feed numbers on Friday, but last months figures were the lowest we have seen since 1996, and ethanol production continues to be a loosing venture suggesting that ethanol producers would like to slow production.  Speaking of which, I wonder if now that the election has come and passed if we are going to hear more about the decision on the ethanol mandate that was supposed to come by next Friday.  That could sure be a wildcard.

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

December Corn Daily chart:

January 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 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 Mixed Up Pre-USDA

Nov 08, 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 ended the day mixed with wheat closing up 8 1/2 while corn and soybeans finished lower.  Row crops struggled to rally with the wheat on the eve of the USDA report and found selling pressure on the close.  The USDA report tomorrow could set the tone for the near term.  The interesting thing to me is that most of the trade is looking for very ho-hum numbers from the USDA.  Average trade guesses for ending stocks are very close to the numbers the USDA gave us last month.  So, is the expectation for a quiet report day tomorrow?  I certainly think not.

This report tomorrow is a big deal, maybe the biggest of the year.  The row crop production numbers the USDA gives us will likely be the final production numbers for this past growing season that went anything but smoothly.  After tomorrow the supply side of the US balance sheet should be determined for the 2012-2013 marketing season.  So this report will tell us exactly how much corn and soybeans we have and then we can shift our attention to following demand to see if there is need for price rationing.  The bigger the production number the less demand that will need to be rationed.  The issue right now, especially for corn, is there really is not a whole lot of demand out there at current prices.

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

If the charts can tell us anything before the USDA report they would be predicting a negative report.  Personally, I think that when you have big fundamental news you can just as well throw the chart out the window, but it is interesting to note that while the wheat chart looks like it wants to attempt an upside breakout the corn and soybeans have a much different story.  The corn chart going into the report looks like it is moments from rolling over to the downside.  The short term 9 and 20-day moving averages have crossed below the 100-day moving average changing the long term trend to down.  In the last 3 days corn had rallied off lows to test 20-day moving average resistance at 747 and failed, even closing below 9-day moving average support at 742 today.  The soybean chart looks determined to retest October lows and gave a fresh sell signal today with a new low close for the move.  The moving average analysis for soybeans is more negative then corn with the short term moving averages (9 and 20) trading well below the 100-day and a fresh new sell signal with the 9-day crossing below the 20-day today.

From a fundamental perspective wheat has a bullish weather story in the US and abroad.  European wheat futures continue to test contract highs, and the 2 week forecast for the US plains is dry.  For corn the bull story has been and continues to be a short supply outlook.  That will be decided tomorrow, and looking forward it is tough to get too excited about the tight supply situation while we are looking at some of the worst demand numbers in years.  We might have to see corn go lower to buy back demand before we can get excited again about the short supply situation.  Soybeans also have a short supply and the US is the biggest shop for the world to buy soybeans at right now, however with South America planting record acreage and what look to be an El Nino weather pattern there could certainly be an abundance of cheaper South American beans in the months to come.  And, as we saw poor export sales this morning, the indication is that global soybean buyers could be going hand to mouth for now waiting for South America.  The soybean story will go with South American weather.  If weather continues to look good buyers will wait to make bug purchases and fill their bins.  If weather turns south as it did here in the US this summer then we will see a flood of soybean buying interest in cash and on the board.

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

Either way I see this report tomorrow as having the potential for being a big market mover.  I also think that it can give us direction for weeks, maybe months to come.  I do agree with the average trade guess for soybean ending stocks, but I am about 100 million bushels higher then the average guess on my corn projection.  The USDA has surprised some with bullish reports the last two times around.  Is it a trend forming?  Or are we due for a bearish report.  A bearish report would sure get some more corn sold for export, I wonder if the USDA thinks about things like that.

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

 

December Corn Daily chart:

January 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 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 Rally Alongside Markets on Election Day

Nov 06, 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.   

Corn and Soybeans had a mild bounce today ending a 3-day slide.  Fundamentally there was little grains news to support markets this morning and this bounce was mostly fund driven and technical in nature.  December corn held $7.32 for the fourth time yesterday and soybeans were able to hold yesterday's lows triggering some light profit taking early.

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

The big story of the day is the presidential election.  As the day went on there was significant fund buying in many markets in anticipation of an Obama victory.  Crude oil at one point was up well over $3.00 a barrel, the DOW was up over 150 points, gold over $30.00 an oz higher.  This overall warm and fuzzy feeling did, to a small extent spill over to the grains as well.  The idea here is that another 4 years of spend happy Obamanomics will continue to put pressure on the US dollar and therefore support commodities and stock markets.  This all remains to be seen as first of all the election is not over yet and a swing in poll tallies could swing markets the other way.  And secondly, I have to wonder if President Obama is indeed elected if the market is setting it self up for disappointment as it seems unlikely that he will be able to add the same amount of stimulus to the economy as he did in his first two years now that he has a mixed congress.

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

Soon enough we will go back to trading grain fundamentals as we gear up for what looks to be the most impactful USDA report in years on Friday morning.  This report will be the final USDA report for row crops and will likely see changes in yields, planted acreage and harvested acreage.  We will be taking a closer look at expectations for this report on Thursday afternoon, hope to see you then...

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

 

December Corn Daily chart:

January 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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