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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.

Mixed Grain Trade, Looking for Direction from SA

Jan 22, 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.   

Soybeans were higher, wheat was lower while corn was caught in the middle on a slow start to a short week.  Wheat was under pressure from talk that Russia was not going to lift or reduce import duties on wheat.  There was talk Friday that Russia would lift the duty with the intention of buying french wheat.  While the duty is still in place the french wheat is still on the market keeping prices at bay.  Soybeans found buying interest on news that China had bought 2 cargoes and ended up closing over some key resistance.  Corn was flat today as it was caught between soybeans and wheat and the South American forecast had little changes from Friday.

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South American weather will be the main driver for corn and soybeans in the near term.  At the moment the forecast is calling for the high pressure ridge over Argentina to break down allowing for 60% coverage later this week.  However, the ridge re-establishes itself early next week only to have a chance to be broken again at the end of the 2 week forecast.  This on again off again nature of these forecasts will likely keep some concern in the markets until the rains hit the ground.  If dry areas do get the rain we could be putting a high in for now until the US growing season.  There is no doubt that US ending stocks are tight for corn and soybeans but if South America comes up with a record crop we could be looking at the possibility of the US importing corn and soybeans and making the domestic balance sheet much more comfortable.

There is not much to take away form today's trade aside from the March soybeans closing over the 200 day moving average for the first time since December 19th.  This could be setting up for a longer term double bottom on the daily chart and suggesting a new leg higher.  At the moment I am taking this technical signal with a grain of salt due to the low volume today.  I would like to see another close above today's highs to jump on that.  Either way, it seems that for now any strength in row crops should be concentrated on old crop while most of the bears will focus their energy on new crop.  But, keep an eye on South America.  If the US does start to import SA grain the whole complex (new and old) could break. 

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

March Corn Daily chart:

March 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 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=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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