The Ted Spread
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.
Are Grains Headed to New Lows?
Feb 12, 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 seems like every time I am out of the office for a few days the grain markets go down. So, I have been instructed by many of my clients to live in my office for a while. Actually, when I am here I pretty much do exactly that and I don't have any plans to go anywhere so maybe it is time to find some support.
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Corn has now closed lower in eight consecutive trade sessions and has smashed 200-day moving average support even though the USDA reminded us of tight domestic stocks on last Friday's February report. The bottom line is that the world cary over increased and there is potential of South American Imports to the US in the coming weeks. The USDA also showed us a huge number in their baseline report that reminds us that we could be one good growing season away from a massive carry over number. I intend to go into further detail and analysis about the USDA Baseline Projections in my next posting which will be for Top Producer Power Hour on Thursday, and I think I have some interesting points to talk about.
CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=tseifrie
Soybeans have also been under significant pressure since the USDA report. This is a surprise to many as the us carry over numbers were bullish at face value coming in below trade expectations. The problem was/is that the world carry over increased on a massive South American crop. Now, with weather looking good in most areas of Brazil and just wet enough in much of Argentina it seems that soybeans could continue to slide as we lead up to South American Exports coming on line. Here too we could be looking at the possibility of not only loosing out on export business but we could end up as importers when all is said and done. This would add a significant amount of soybeans to the balance sheet and bail the US and the World out of a tight stocks situation.
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 firstname.lastname@example.org
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