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April 2012 Archive for The Ted Spread

RSS By: Ted Seifried, AgWeb.com

Ted is the Chief Market Strategist and Vice President in charge of the Zaner Ag Hedge Group and specializes in agricultural hedging employing various strategies using futures, futures spreads, outright options and option combinations. He believes it is paramount to be able to use different strategies to adapt to market conditions. Ted works with large to mid size grain and livestock producers and end users in North, Central and South America.

Corn Finds Tech Support, Help from China

Apr 19, 2012

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY 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 finds tech support, help from China

Both old crop and new crop corn contracts were aimed at testing major support levels after yesterday's close.  May corn had touched the $6.00 per bushel mark and closed just a few cent off it, December corn had touched $5.25 per bushel for the third day in a row.  Thursday's trade brought a reversal off the recent lows fueled by rumors of China poking around to buy some old crop corn.  The old crop balance sheet is tight enough that any major China purchases could cause the need for price rationing.  The initial strength driven by the China news was enough to bring in bottom picking activities as well as short covering as the timing of good news could not have been better.  Funds were noted buyers of approximately 12,000 contracts.  This sort of fund buying is usually technical in nature.

With this reversal off the lows it is possible that we could have a double bottom formation in May corn at $6.00, as well as in December corn at $5.20.  From a technical perspective this could be the base for which a multi-week rally could build from.  However, from a fundamental perspective it would really seem that although old crop corn could see the need for price rationing and therefore higher prices, it is difficult to build a case for an extended new crop corn rally with massive acreage and a record fast start to planting.

See May Corn Daily chart:

See December Corn Daily chart:

 

This means that speculators should be looking for opportunities and producers need to make sure they lock up prices that makes sense for their bottom line.  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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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

Planting Progress 4/17

Apr 17, 2012

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY 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.   

 

Planting Progress

The USDA released the weekly Crop Progress report this afternoon which came a day late due to an electrical fire at the USDA.  No Comment on that.  With ideal weather in most areas through the bulk of March and April Traders were looking for corn to be 18-22% planted at this point, compared to 5% last year.  The USDA is reporting corn plantings at 17% as compared to 7% last week, 5% last year and 5% 5-year average.  The biggest drag on planting was Texas reporting 54% planted vs 56% last year and 59% 5-year average.  Aside from slower then usual plantings in Texas we did see some states post impressive progress numbers.  Some standouts being:  Illinois at 41%!?!, Indiana at 24%, Missouri at 39%, Kentucky at 59%, Ohio at 10% and Tennessee at 80%.

With the USDA reporting planting progress at a slightly slower pace of 17% compared to the trade expectation of 18-22% we could expect to get a slightly bullish reception to this report.  The trade expectations may have been a bit optimistic however.  Texas will get planted, and this report reflects the fact that conditions are nearly ideal.  The simple fact that Illinois is 41% planted compared to 6% 5-year average is pretty bearish long term. 

See December Corn Daily chart:

Wheat numbers were slightly bearish with the Winter Wheat crop condition improving to 64% good to excelent compared to 61% last week and 36% last year.  Spring wheat is now 37% planted compared to 21% last week, 5% last year, and 9% 5-year average.

See December Wheat chart:

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 in the $5.00 range and new crop wheat in the $6.50 range. 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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. All known news and events have already been factored into the price of the underlying commodities discussed. The limited risk characteristic of options refers to long options only; and refers to the amount of the loss, which is defined as premium paid on the option(s) plus commissions.

FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STRIKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR EVEN MOVE IN THE OPPOSITE DIRECTION

Soybeans Post a New High Close as Corn Is Unimpressive

Apr 12, 2012

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.   

 

Soybeans post a new high close as corn is unimpressive

May Soybeans were able to put up the highest close we have seen since September of last year.  Support came from outside markets as we observed a "risk on" trade day stemming from overnight comments by the Federal Reserve Vice Chairman Janet Yellen making a case for the Fed to continue to keep interest rates low for an extended period of time and saying that the Fed may need to take even further action to stabilize the economy (i.e QE3).  Stocks, energies and commodities as a whole benifited from this as the US Dollar Index fell more then 50 points.

Export sales were better then expected for corn at 959 mt compared to trade estimates of 400-850 mt and 1122 mt last week.  Soybean sales were a little disappointing at 636 mt compared to trade estimates of 750-1150 mt and 1112 mt last week.  Wheat sales were as expected at 425 mt compared to trade estimates of 350-650 mt and 512 mt last week.

Again, soybeans had a positive day today even with weaker then expected exports but corn however had a difficult time staying above unchanged even with support from strong exports and supportive outside markets.  And while it looks like soybeans are set to retest recent highs, corn can not seem to catch a bid.  This has to be a little troubling for corn with what looks like favorable weather coming down the pipeline and a potentially record setting planting pace.  It seems that strength in soybeans alone may not be enough to get corn to rally.  It may take something like a late frost to burn out the early planted corn to get the market excited.

See Corn Daily chart:

See Soybean Daily chart:

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 in the $5.50 range. 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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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

In wake of the 4/10 USDA Supply / Demand Report

Apr 10, 2012

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY 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.   

 

In the wake of the 4/10 Monthly USDA Supply / Demand Report

The USDA produced a rather uneventful Monthly Supply / Demand report today, leaving corn ending stocks unchanged and lowering soybean ending stocks to just above the average trade guess.  However, the markets responded with a sharp sell-off.  This was partially due to an overall negative day for commodities.  But even with commodities under pressure when the grains opened the pit session, the first half of the trade day looked like we could be shrugging off the unchanged corn ending stocks and embracing the widely expected bullish soybean numbers.  Early on it seemed that the attitude of the trade was that even though the USDA left corn stocks unchanged, they certainly would have to lower their number in months to come.  Then the day truned.  I would suggest that there are a number of factors that have been growing behind the scenes of the bullish old crop corn and new crop soybean stories.

First off the IMF warned this morning that global exporters should be weary of lower prices in the next year due to slowing global demand.  This could be suggesting that our seemingly tight new crop soybean balance sheet could be less of a concern, and with this expectedly bullish report I ask what new bullish news will we see for soybeans in the near future?  Weather sure looks good and although some years that may suggest more corn planted, this year I think we have stretched that rubber band as far as it will go.

Secondly we saw a planting progress report from the USDA NASS yesterday evening showing corn planting at 7%, about a week and a half ahead of time.  But that's only part of the story, some of that early planting progress is coming from very good ground.  Its not just that areas on the fringe of the corn belt are rolling forward faster then usual, but Illinois is 17% planted, Indiana 6% and Missouri is 23% planted.  So, looking at today's board it would be a very valid question to ask - then why is old crop corn having a tougher day then new crop?  Because early planting generally means early harvest and we may not need to carry old crop supplies as far.  And the USDA leaving the ending stocks unchanged suggests that there is no more price rationing needed to control old crop supplies.  This weighed heavily on old crop corn today, and could continue to do so into the near future.

 

See Corn Daily chart:

See Soybean Daily chart:

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 in the $5.50 range. 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 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?rid=Seifried

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. 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

Planting Progress??

Apr 02, 2012

The USDA released the first weekly Crop Progress report of the year this afternoon.  Because of the ideal weather in most areas through the bulk of March Traders were looking for corn to be 5-7% planted at this point, compared to 1-2% last year.  The USDA is reporting corn plantings at 3% as compared to 2% last year and 2% 5-year average.  The biggest drag on planting was Texas reporting 48% planted vs 53% last year and 50% 5-year average.  Aside from slower then usual plantings in Texas we did see some states post progress numbers that we would not expect to have started planting this early in the season.  Some standouts being:  Illinois at 5%, Indiana at 1%, Missouri at 7%, Michigan at 2%!?! Nebraska at 1%, Ohio at 1% and Tennessee at 15%.

With the USDA reporting planting progress at a much slower pace of 3% compared to the trade expectation of 5-7% we could expect to get a bullish reception to this report.  The trade expectations may have been a bit optimistic however, considering that in many areas crop insurance does not allow planting for another 2-3 weeks.  If the current forecast holds we could be set to see a huge jump in planted acreage in short order.  Texas will get planted, and this report reflects the fact that conditions are nearly ideal and we are ready to go.

For my brave friends in Michigan who have started planting corn, please call me as I would love to buy you lunch!  HoRah!

See December Corn Daily chart:

 

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 in the $5.50 range. 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 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?rid=Seifried

 

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