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May 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.

What is this Big Move in Corn Spreads Telling Us?

May 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.      

The July corn - December corn spread, otherwise known as the old crop - new crop corn spread, has narrowed over 47 cents in the last eight trade sessions.  This is a big move as far as a spread is concerned, and it comes at a very interesting time.  So, what is causing this move in the spreads and more importantly, what does is this telling us?  

In many markets we talk about bull spreading and bear spreading.  Typically a bull spread consists of buying the front month and selling a deferred month in a certain market.  It is called a bull spread because it is done when you are expecting a rally.  In a bear spread you sell the front month and buy the deferred month.  These have a tendency to work if you are right about market direction because the front month usually moves further and faster in the overall direction of the market.  So, for example if you put on a bull spread (buy front month, sell deferred month) and the front month rallies 14 cents and the back month rallies 9 cents you have made 5 cents on the spread.  

In grains, bull spreads and bear spreads get a little more complicated because we grow a crop every year and fundamentals can differ from one marketing year to the next.  A july - December spread is called an old crop - new crop spread because July corn is corn that was grown last year and December corn is corn that will be grown this year.  They are connected however because of the amount of grain that is carried over from one year to the next.  If there is a shortage of grain one year, but the prospects for next years crop are good the July will hold a large premium over the December.  On the other hand, if there are large stocks one year and concerns about new crop production then July will hold much less premium over December.  

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

The second example above is one way that the traditional bull spread concept can be an issue in the grains.  But, even if we have large grain stocks for one year but are worried about the next the old crop will still rally with the new crop because while we are preparing for a short crop the next year we put more premium on the grain that will carry over from one year to the next.  In fact prices will go higher in order to dampen demand so that the amount of carry over is maximised.  

So, knowing this lets look at the current situation.  There was a major drought year in the US last year, so corn stocks are on the tight end of the historical spectrum.  The outlook for next year was that we would have a giant crop on record acreage but too much rain lately has caused concerns that some corn will not be planted therefore causing concern for production.  This certainly could be a set up for a rally, and in this scenario we would expect the new crop deferred contract to rally, maybe even take the lead but given the tight stocks and the need to preserve carry over old crop should follow.  

In the last 8 days we have seen this concept break down.  As concerns about getting the corn crop planted in time have mounted December corn has rallied almost 60 cents off of lows.  In the mean time old crop July corn has not only not been able to keep up in the rally it has actually lost ground.  This is a very strange situation.  It is certainly conceivable that this is a situation that December should gain, but it is hard to justify the complete opposite movements in the two contracts and the huge move in the spread in a short period of time.  

Looking forward this could mean one of two things.  The first possibility is that the old crop July corn contract will be looking to play catch up in a big way on a continued rally.  In this case a traditional bull spread will make a comeback and work well.  The second possibility is that the recent rally off lows in new crop December corn has a different agenda.  By that I mean it is possible that December corn rallied not because of concerns of a tight stocks situation for next year, but for a different reason such as motivating corn producers to do whatever they can to get the corn planted this year even if it means planting late.  In many of the unplanted areas late planting is a risk at this point.  In northern areas there is a risk of loosing production to an early frost.  If this is the case this most likely would not be an extended rally.  

The bottom line is that the big move in the July - December corn spread in the last 8 days is not usually a sign of an extended rally.  

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

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.

December Corn Daily chart:

July Corn Daily chart:

July - Dec Corn Spread 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.

Was Planting Progress Friendly for a Rally?

May 28, 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.      

New crop soybeans and new crop corn were sharply higher after the Memorial Day holiday.  The talk was that better then expected rains falling over much of the midwest delayed planting.  On friday the trade had been expecting corn to be 85% planted and soybeans around 40%, but with the rains there was talk that corn could only be 80% planted and soybeans around 35%.  Tuesday afternoon's crop progress report showed otherwise as corn is now 85% planted and soybeans are 44% in.  So, if the trade really lowered their expectations for this report and this was the reason for much of the rally then this report would suggest that this rally was not completely justified and may have been overdone.  

As I break down the crop progress report it strikes me as being pretty bearish despite the extra rain.  Corn is now 86% planted and even though we are well behind last years pace of 99%, we are now only 4% behind the 5-year average of 90%.  That's right, after a record slow start corn planting is now only 4% behind average!  And, it is probably a good thing we are behind last years record pace because we all know what happened with that...   

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

Looking at the I state breakdowns - Illinois is 89% planted compared to 89% average.  Indiana is 86% planted compared to 77% average.  Iowa is 85% planted compared to 98% average.  So Iowa is still a bit behind, but Illinois and Indiana are at or ahead of the 5-year average.  Iowa could catch up fast if they get an opportunity, and they still have time.  There are 2 states that are concerning - Minnesota is 82% planted compared to 95% average.  Wisconsin is 64% planted compared to 85% average.  There will likely be some corn acreage lost in these 2 states as well as in North Dakota.  However, the acreage lost could mostly be fringe areas and this could add bushels to the national average yield.  

As far as soybeans are concerned 44% planted is 17% behind the 5-year average of 61% but a 20% jump in a week is impressive.  Some are saying that soybeans planted after June 1st may have a lower yield potential, but we are rarely finished planting soybeans by June 1st.   So, some soybeans may have a slightly lower yield potential then in previous years, but it seems that soybeans may be picking up some corn acres which could more then offset any loss in yield potential.  

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

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.

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.

Was That the High in July Soybeans?

May 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.   

July soybeans have rallied over $2 from the April lows and have been lending strength to the entire grain complex.  Today old crop soybeans broke through the $15.00 mark, moved to within 18 cents of limit up, set a new high for the year and reached levels that had not been seen since things fell apart last September.  And then the bottom fell out.  After soaring to new yearly highs by mid-day July beans fell apart going into the close.  The last trade was up only a 1/2 cent after being up 52 1/2 cents, and the settlement price of 1499 1/2 was 47 1/4 off the high.  What happened?  

Strong cash basis in the interior and sold crush margins have been fueling a strong rally in old crop soybeans.  Soybean demand has been moving at an unsustainable pace.  Export sales today were strong further adding to the concern.  Talk that a Chinese soybean crusher was caught in a cash basis contract and needed to cover futures contracts added fuel to the fire.  

In the mean time a strong US dollar and a huge South American soybean crop have been adding incentive for US imports of South American beans.  We have heard lots of talk of South American soybeans headed to US shores, and this is in part the problem as demand for soybeans has been high in the middle of the country and getting soybeans upstream has been slow.  At this point however it seems very likely that the proper motivation has occurred to get it done.  Also, talk mid-day that a port strike in Argentina had been resolved encouraged thought of more aggressive South American exports, including possibly to the US.  

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

From a technical standpoint the move today in July soybeans is not a traditional sell signal.  However, in my book whenever you close almost 50 cents off highs it is a huge red flag.  This is not a key reversal, it is not even a reversal as we still posted higher highs and higher lows.  But with the way things were falling apart at the close I have to wonder where July soybeans would have ended up if grain markets were still open until 2.  For now, it is a day that should make soybean bulls take caution.  Honestly, I think there is a very good chance that 1546 3/4 is the high.  

Overall the continued strength in old crop soybeans has been surprising to me.  With a stronger US dollar and higher prices and a huge supply of soybeans in South America it would seem that we should be seeing large imports of soybeans.  In fact, there is a good chance that we are.  Once the beans at the ports make their way upstream there will be substantial pressure on cash markets and probably futures markets as well.  

As far as new crop is concerned, November soybeans have been supported by strength in old crop but have not followed on a large scale.  With the potential of 1-1.5 million acre increase in planted acreage it is difficult to get too excited about the new crop situation unless there is a major weather issue.  Now, we still have to grow the crop (shoot, we still have to get much of it planted) and we will be very sensitive to weather this year, but if things go well there will be a lot of soybeans in the world.  

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

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.

July 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 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.

Is New Crop Corn Prime for a Bounce Off Lows?

May 21, 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.   

After spending last week putting pressure on new crop corn on account of aggressive planting Monday afternoon's Crop Progress report confirmed what the market had been thinking.  Now that this report is out of the way and some severe weather has come rolling through is it time for the December corn to bounce?

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

Technically, December corn has made a new low for the move yet failed to close below the late April low of 517.  Until Dec corn has a solid close below 517 I believe there is a chance that this could be a springboard for an attempt at a rally.  The last two trading sessions have started  at or below 517, but on both occasions has come back and closed above.  If this continues technical traders will start trying to pick a bottom.  

Fundamentally, continued late planting and now severe weather could add support.  It is very impressive that planting progress was able to jump 43% in a week.  That is a record.  However, the other 29% still needs to get in and rain early this week could hinder that progress.  On some level though the late planting story, while still a big and very important story is getting to be an old story.  To some extent I really think that a better reason to bounce might be the fact that we have gotten the report that we knew was going to be bearish behind us.  

Either way, until December corn closes below 517 I am going to look for a bounce to sell higher.  If Dec corn closes below 517 it may be the beginning of a new leg lower.

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

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.

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.

Corn Falls Under Pressure as Weather Agrees with Planting

May 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.   

Welcome to the 100th installment of The Ted Spread!  Thank you so much for taking the time out of your very busy schedule.  I am also very great full for all the comments, calls, questions, encouragements and criticisms.  It makes the whole thing worthwhile (I suppose calling me an idiot is better then not calling at all, Ha!)...

Corn was under pressure today as weather is finally conducive for widespread plating.  The consensus is that there will be an unprecedented jump in planting progress on Monday afternoon's crop progress report.  I tend to agree as everyone I have called on in the last few days has been in the field getting work done.  The progress that has been made this week is amazing and once again proves that the American Farmer is the best in the world.  

From where I sit, the progress this week has been staggering.  I have clients all over the grain belt which is always very helpful to my analysis and to my clients, but this has been one of those special weeks where it has been really exciting to talk to everybody and get an update and in turn give updates from all over.  It is a wonderful thing to get a broader perspective rather then only really knowing what's going on in my neck of the woods.  It is just as wonderful to be able to pass that along as well.  Without naming names or going into too much detail here are some of the stories -  

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

A client about 25 miles east of Springfield, IL  has gotten almost 80% done of his 2,400.  

Further east in LaFontaine, IN I have a client that finished his 4,100 acres yesterday, but he says most guys around him are 30% at best and going hard to get as much in before the advertised rain late weekend into early next week.  

Another client near Danville, IL that is at 0% on 800 acres as of Wednesday, but going in the morning...    Near Linton, ND 9,000 acres planted in less then 10 days.  

Rained out in Fargo with 2,000 acres of corn to go, expecting almost 4 inches this weekend so may be switching.  

Logansport, IN 35-40% as of today, looking to be done with corn before the rains late weekend.  

We'll be done tonight in Delween! (IA)  

From what I can tell it is wet and messy, but there are or have been opportunities for guys on the ball.  I hate to be cliche, but you snooze you loose.  Anyone who hesitated to get in the field is struggling to catch up.  

With all of the progress being made December corn has gotten close to mid April lows and key support.  There certainly are still some wet spots, so if there is more rain in the forecast Monday, or the progress report is dissapointing corn could pick up off of support again.  However, if there is a lack of bullishness early next week December corn could be set to take another leg lower.  

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.

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

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.

End of the Short Squeeze

May 14, 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.   

In the last few weeks corn and soybeans have been supported by strong May contracts.  May corn and May soybeans have been in the delivery period and there had been no deliveries.  In the mean time, commercials looking to source grain have put pressure on those who have held short contracts pushing May corn 70 cents higher and May soybeans $1.20 higher.  This short squeeze has been a major supporting factor for corn and Soybeans.  But now that May contracts are off the board and the July contract are over a month away from their delivery period what should we expect now?  

The May-July corn spread ended at 54 cent premium to May and the May-July soybeans spread ended at $1.10 premium to May.  This is a big discrepancy and suggests a strong cash market and a strong basis.  This has been supportive to the grain complex as a whole.  However, with the July contracts being a ways away from delivery period this positive effect on markets could be diminished.

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

Another question is if the cash market will stay as strong as it has been.  It would seem to me that producers are waiting to sell much old crop corn until they know they have a new crop planted.  As of Monday we were only 28% planted according to the USDA.  Soybeans have been very strong, but incoming shipments from South America could start to fill demand needs and bring lower cash prices.  It could be the case that cash prices are peaking for awhile.  

So, with the short squeeze in the May contracts out of the way some of the support to futures prices could fall away as well.  Cash prices could also be hitting a peak soon with better opportunities to plant and the potential for South American Imports.   

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

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.

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.

South American Soybeans Headed to the USA?

May 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.   

Tomorrow the USDA will release updated balance sheets for 2012/2013 and give us numbers for 2013/2014 for the first time on a WASDE report.  By no means is this a small report.  There are lots of numbers, and this report could set the tone going into the growing season.  So obviously we will be looking at that very closely tomorrow.  However, on the eve of the report, rather then going in and taking guesses on what the report is going to say like so many other analysts I thought I'd touch on something that not many people are talking about right now - US imports of South American Grain.  

Early this morning we were hearing rumors of 3 cargos of South American soybeans headed to a US destination.  The market either did not notice or didn't care as soybeans lead te way higher.  If these rumors end up to be true this could put a significant amount of pressure on soybean prices.  Our tight old crop balance sheet could be offset by imports and the need for price rationing could fall to the wayside.  Cash basis could stay supported in the interior far a while, but futures prices and gulf basis would suffer.

Then mid day I got an email from one of our clients in Uruguay who has been a trusted and very reliable source...  

- Its confirmed that the first ship is loading beans from Paraguay and Uruguay with a USA port destination.  

If this is true, which again sounds likely, this could be trouble for soybeans prices going forward.  If south America selling soybeans to the US then the market at some point soon push the agenda to see how low soybean prices need to get to stop US imports and then rebound slightly above that price.  In other words, the market will push to find the lowest price possible from South America, get just above it while we need imports and then break below it once the pipeline is fat with soybeans, South American or otherwise.  The other factor here it the US$.

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

The stronger the US$ the more purchasing power we have in Brazil, Argentina and Uruguay.  If these sales were booked before today which the surely were, then the case for importing South American soybeans got much stronger today as July soybeans were up 18 cents and the US$ Index was up 86 points.  This is a double whammy that could bring on a flurry of activity.  

So now I'm wondering - if tomorrows USDA report does happen to be bullish old crop soybeans if any positive reaction would be short lived.  I think I might have my finger on the sell trigger as I am sure South America does. 

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

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.

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.

Early Thoughts on Friday's USDA Report / Trade Guesses

May 07, 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.   

This is a big report because not only are we going to be looking closely at the USDA's numbers for 2012/2013 but we will be very interested to see what they say about 2013/2014 for the first time.  In the grain complex the biggest surprise is usually the market driver on these reports.  Meaning, if we are way off on one of the numbers that commodity will likely be the leader for the day.  If there is no big surprise or all the numbers are big surprises then corn seems to be in the drivers seat of the grain complex.  However, at this time of year it is not uncommon to have grains move different directions as the acreage story unfolds.  

The biggest numbers in this report will be ending stocks numbers for 2012/2013 and 2013/2014.  The average trade estimates are as follows:  

2012/2013  

Corn - 749 million bushels

Wheat - 733 million bushels

Soybeans - 123 million bushels  

2013/2014  

Corn - 1.993 billion bushels

Wheat - 658 million bushels

Soybeans - 236 million bushels   

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

There are a lot of moving parts on this report so it is very difficult to tell if the trade will be paying more attention to 2012/2013 or 2013/2014.  It really is a situation of two sharply contrasting fundamental make ups.  2012/2013 was a major drought year resulting in low ending stocks and tight balance sheets (also record high prices in corn and beans last summer).  2013/2014 is expected to be a huge crop as long as we get it planted and have a good growing season.  Here again the biggest surprise may take the lead.  

At first glance I wonder if the USDA is really going to show us almost a 2 billion bushel carry over in new crop corn.  They most likely can not change acreage numbers this early in the game, but them might choose to bump up the demand numbers to even things out.  The same concept might be in play for the soybeans.  If the USDA can not increase soybean acreage at this time they might want to tone down demand numbers to even things out.

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

I will get into more detail on Thursday.  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.

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

So Where do Soybeans Stand in this Late Planting Mix?

May 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.   

As we wait to get into fields for some weather to pass, corn and wheat have been able to stay positive.  This should be the case as planting progress is at record lows and tensions are getting high about if we get a corn crop in or not.  Whether it is too late to plant corn or not will really depend on where you are, but for most areas there will still be time as long as the forecast for the next two weeks keeps planting opportunities in it.  But where do the soybeans stand in the mix?

It seems fairly cut and dry in the corn market right now as far as were prices might be going.  It is a weather market, and if weather gets better corn should go down, if weather gets worse or continues to keep planters out of fields then corn should go up.  But, figuring out what this all means for soybeans is a trickier proposition.  On one hand late corn plantings may mean more soybean acres, on the other hand if weather really stays bad maybe that acreage is just lost or worse we cant get the intended soybean acreage planted.  At the same time you have a massive crop in South America, but they have been very slow to step up to the global market.

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

If we walk in next week and the weather forecast is for cold temps and rain or snow will the soybeans follow corn on a limit up move, or come under pressure on ideas that at this point it is time to give up on corn and plant soybeans?  Really I think it depends on how many corn acres are lost.  If corn were to loose 1.5-2.5 million acres there would still be enough corn planted to end up with well over a billion bushel carry over even if we fall short of trend line yields given the projected demand structure.  In this case the added acreage to soybeans along with huge South American supplies would likely mean a lot of downward pressure on soybean prices.  Now, if corn were to loose upwards of 3 million acres the picture starts to change.  In this case there very well could a strong rally in corn which would likely bring soybeans along for the ride despite some bearish fundamentals.  So, it really comes down to how many corn acres really are lost because loosing 1 or 2 million acres in corn is not as big of an impact on the balance sheets as gaining a million acres in soybeans.

In the near term it is very difficult to predict soybean price action or even soybean price reactions to changes in the weather driven corn market.  In the end I believe it all comes down to how many acres are lost in corn.  If there enough corn acres lost then soybeans could be a follower on a rally.  If the corn acreage lost is significant (which it likely is) but not enough to draw ending stocks below 1.2 billion bushels then soybeans will likely be the leader lower on bigger acreage and stiff global export competition.

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

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.

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.

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