Sep 20, 2014
Home| Tools| Blogs| Discussions| Sign UpLogin


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.

Is Lat Corn Planting Producing a Golden Opportunity?

Apr 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.   

It took a little longer to develop then I thought, but here is the late planting rally.  We are at a historically low planting pace and after the drought we had in the US last summer it seemed likely that the market would be very sensitive to any weather issues.  We need a decent crop this year to take pressure off of tight corn supplies and any hiccup should be met with adding premium to the market.  In this case it also serves as an incentive to get the job done.  But is this a total change in trend?  Are we really going to loose a massive amount of corn acreage?

So far I do not think a huge amount of acres have been lost.  There is likely some acres in the northern states that will go unplanted or switch to soybeans due to their shorter growing season.  Right now my guess is 500,000 to 1,000,000 acres.  That number is likely to increase, but most of the lost or switched acreage will come out of fringe areas.  This may have a positive effect on the national average yield and could offset some of the lost potential of late planted corn.

If you look at where the rain is set to fall in the next few days it is mostly in areas that will still have some time to dry out and plant.  My biggest concern was that the northern areas would get huge precip totals after getting all that snow.  That really would have been a disaster (and in some localized areas is) and would have caused a massive amount of acres to go unplanted.

It also seems that the worst of the weather is behind us.  As temps get warmer drying happens faster.  I know that a lot of areas have a lot of drying to do, but it seems that spring has turned the corner.  I have spoken to a lot of guys out on planters in the last two days, and a lot of others doing field prep.  So far this planting pace ties the record low, but we can sure get it done fast these days.  Also, for many the later planted corn has preformed the best in the last three years.

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

The most interesting thing I have noticed in the last 24 hours is that Monday's limit up rally in July corn was done on high volume, but open interest declined almost 33,000 contracts.  This suggests that this rally was based mostly on short covering not new buying.  Typically this is not how longer term rally start.  Weather might have to get worse again to inspire new buying.  It is also disappointing to the bull camp that there has been no follow through after a limit up rally.  This could be a potential red flag for a reversal back to the down trend soon.

This rally has put new crop corn back to some more comfortable levels for producers.  I think we need to see this as it is - an opportunity.  This could be a short lived gift to take advantage of.  Chances are that we do get the crop in and with all the moisture in this weather pattern it seems like we could be set for a good growing season.  We don't need a 2.2 billion bushel carry over in corn to see lower prices.  Even a 1.4-1.6 billion bushel carry over will do the trick.  It certainly seems possible if not likely that this could be where we sit come harvest.

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 the charts.

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

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.

Log In or Sign Up to comment

COMMENTS

No comments have been posted, be the first one to comment.

Receive the latest news, information and commentary customized for you. Sign up to receive Top Producer's eNewsletter today!

 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions