Hedging Corn and Trade Ideas for 3/10/14

Published on: 10:51AM Mar 11, 2014



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This report was sent to subscribers on 3/7/14 3:30 p.m. Chicago time to be used for trading on 3/10/14.

December 2014 Corn                                                

After the close recap on 3/10/14: My daily December 2014 corn numbers on Monday: my pivot acted as resistance and was .02 from the actual high my support was .02 ¾ from the actual low.                                                        

May 2014 Corn                                               

After the close recap on 3/10/14: My daily May 2014 corn numbers on Monday my pivot acted as resistance and was .00 ¼  from the actual high; my support was .03 from the actual low.                 


All charts and numbers for 3/11/14 have already been sent to subscribers at 3:00 pm. 


These numbers were used on 3/10/14: 

  December 2014 Corn                                                



4.93 ¾                    2014 High & line in the sand  

------------4.82 ½    Pivot 

4.71 ¼                                       



5 day chart….     Up from last week same day                 

Daily chart …     Sideways     

Weekly chart…  Down        

Monthly chart…Down                     4.91 is the 200 DMA

ATR 8 ¾                                                Balanced 73%      




For 3/10/14: New bracket line is a key resistance, bracket line below supports. 


 New high for the run and closed lower bodes well for another down day to follow on Monday.    


In my daily December 2014 corn numbers on Friday my pivot acted as resistance and was .03 ¾ from the actual high (only .01 ¼ in open outcry); my support was .01 from the actual low.     


For 3/10/14:                                               

 May 2014 Corn                                               


5.02 ½             2014 High                         

4.97 ½                       

-------------4.88       Pivot 

4.78 ½                                                  



5 day chart….      Up from last week same day                                                                   

Daily chart   …    Sideways                                 

Weekly chart …  Down                       

Monthly chart …Down          4.79 ithe 200 DMA

ATR 11                      Balanced 72%      


 For 3/10/14: I continue to say "new 2014 high is resistance, daily numbers support".        


New high for the run and closed lower bodes well for another down day to follow on Thursday. It did not. Friday produced the same signal for Monday. 
In my daily March 2014 corn numbers on Friday my resistance was .01 ½ from the actual high; my support was the EXACT actual low.                  
2012 low was $5.11 FG, 2011 low was $5.10 (now resistance), and 2010 it was $3.24 ½ (spot month continuation chart).            



Grains: Soybeans continue to make new contract highs, and basis levels continue to widen. The longer you hold old crop beans, the worse the basis gets. Cash is not my game, and a hard one for you to play this year. November soybeans have done well to see the $1.09 correction; you would think this was a summer rally. On Sunday we will see if there is a reaction to world events, because normally we would be slow the day before a report. 11 am release will be digested for a day and whatever is thought to be too high will be sold, and too low it will be bought, and by the end of the day it will already be baked into the price. Then it will be weather, planting intentions, and stocks as of March 1, all will help drive the market. The Russian muscle I do not know how it will affect our markets in the short or long term.  


Old crop soybeans soar but the cash says we have plenty right now, and November rallies on perceptions and thoughts the fundamentals have more of a chance to rally until the crop is at least planted, than the bears have looking for a normal yield. We do not have it planted yet, hard to know where prices will be in 2 weeks let alone at harvest. So price is a moving target and you should look for opportunities worth taking advantage of. Once you know and get what protection you need where your insurance takes over, then you can concentrate on reducing call spreads on breaks, and selling upside on rallies. 


December corn could not hurdle this "line in the sand" at $4.90, and it did make sense to take some profits going into the weekend. Once we get past next week, the talk of the town will be the end of the month Quarterly Grain Stocks report. Nobody knows where we will be at next week, but these are lofty levels and will be hard to sustain without some encouragement from the reports. All you do know is that you are long whatever price is unhedged, the upside I have no problem with as long as I do have protection.  


Both corn contracts made a new high for the run and closed lower bodes well for another down day to follow on Monday. I have been saying since the January report that we will look to see what resistance is,corn gave a good signal at a key resistance on Friday that we might have found it. It does not matter if the fundamentals justify the rally or not, if they bet it, you have to call their hand or fold. If you already reduced calls when cheap, if we close above $4.90 I would look to reduce them a little more. The problem is not if we go higher the next few weeks to let’s say $5.10, it is if you do not sell something back. As like anything you do or not do, it must be right for you when you do it. Whatever upside or downside you buy now, it is always for expiration. This is the place to sell corn, so whatever downside you need should be gotten here. If I do buy more upside because we are above $4.90, I would also buy some of the downside I need which will become cheap above $4.90.  


You see the numbers are "spot on", so use them to help you in pricing your option play on the day you do something. "It is also an ideal place to take the sell signals. I would trade with a bearish bias and risk $.03 in corn and $.06 in soybeans".  




Grains: March soybeans are about $.15 from last week’s high, while November soybeans made a new high on Wednesday. March made a new high every day this week, while December corn has been kept in check at the $4.90 key resistance. Nothing weak looking at the charts, but the question is if it has enough strength to make new highs going into the weekend. Nobody except the funds might know the answer. But the biggest and only question you as a hedger need to answer, where will we be at harvest? Only Mother Nature can answer that. One would think with the gains this week the bulls would take some profits going into the weekend. The WASDE report is on Monday at 11am, but the situation in the Ukraine is a big "wild card". I do not know what the market will do, if you think you do and YOU want to bet on it, bet it but have a stop on any idea.  


My way of being long would be not to take the sell signal. Buying is out of the question but will come into play if we get above the resistances. If we close above the resistance, the market usually sees a pull back in 2 days and tests that resistance which is now support, and if it holds I would be more than a willing buyer. But that is 2 days after we get above it, and if short I cannot wait 2 days if the market keeps going up instead. I do not need to have a position overnight, but on the day or the next 2 days we get above that line I would be a willing buyer. I do not want to have a long term bullish position at these levels but would day trade the numbers without bias now. Above the line I want to buy, below the line I want to sell.  


Knowing corn will have a burdensome supply with a normal yield, because the world is producing more corn than the market consumes, I will gladly take every sell signal on the way up, because I only risk a small amount on each resistance level. If corn rallies $.40 and I lose $.03 on each idea, I lose only $.09 not $.40. Doing this at every level, unless an unusual year, I will be able to grab at least $.09 or more when the resistance does hold. If supports or resistances hold only half the time, I lose $.03 when it does not hold, and should make $.06, $.13, or whatever the market will give me when it does hold. That is getting the odds in your favor. The big mistake that people make is losing too much money on an idea.


I can be flexible by standing aside and doing nothing until a trade idea sets up. Producers do not have that luxury; they are always long what is not hedged including our strategy. We ....   Subscribe now!


Do not get emotional, ever, yes it looks like it wants to go higher, but the way I look at it is that it is resistance until broken. Everybody hedged for 6 months or more has profits on the original spreads, so ...


There is never an excuse for not doing what you think you need to do, and uncertainty will cause you to do nothing even on things that you might want such as more upside. 


Make sure whatever you do whenever you do it, it is the right thing for you to do, or why are you doing it? The market does not prove what you did was right or wrong, it must be the right thing to do when you do it. 


Buying the upside might be for the now, but until you sell it will always be until expiration. Everything you do for your hedge account must ultimately be for expiration.  


You see the numbers are "spot on", so use them to help you in pricing your option play on the day you do something. "It is also an ideal place to take the sell signals. I would trade with a bearish bias and risk $.03 in corn and $.06 in soybeans".



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