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The Ted Spread

RSS By: Ted Seifried, AgWeb.com

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

December Corn Falls Just Short of a Buy Signal Today

May 31, 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.   

 

December Corn Falls Just Short of a Buy Signal Today

Despite rain falling on dry areas, heavy pressure in soybeans and outside markets December corn held up well today.  From a technical perspective the December corn was almost able to close above the previous 3 days highs and above the 20-day moving average.  This would have produced a buy signal and suggested a return to May's 550 highs.  Even though we did not see a buy signal today, the door is open for the possibility of a buy signal tomorrow.

From a fundamental perspective the new crop scenario could be turning slightly more bullish.  Hot and dry conditions at the end of last week caused a 5% drop in crop conditions.  And although overall the crop conditions are still good at 72% good to excellent, a 5% decline in a week is a big move and really underlines the stress that some areas are under.  We are currently getting rain in some of the areas in need, but the forecast for next week seems to be trending dryer again.  Also, some northern areas saw frost the last two nights and this could set up another drop in crop conditions despite getting needed rains.

It may be worth looking at buying September calls or a bull call spread either as protection against a short futures or short calls - long puts strategy, or as a speculative trade.

Call me if you would like to look at some hedge strategies for this year and next, or if you would like to know what I am doing as far as buying September corn calls.

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

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

When Does Weather Matter: http://www.zaner.com/offers/?page=6&ap=tseifrie

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

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