TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS ANDMAY 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.
Corn has taken a step back to start the week on a wetter forecast. With crop conditions rated 67% good to excellent the crop is starting behind where it has been in the last few years and the rain is needed. But, is this the end of the corn rally?
It is very early in the year to make an argument on where the national averagecorn yield/production might end up. However, this crop has had its share of issues getting started. In many areas a very wet spring was followed by an extended period of hot and dry leaving us with a highly variable corn crop at this point.
On the surface there might not be too much to worry about yet, the drought monitor is mostly drought free (with the big exception being Montana and the Dakotas), and corn planting ended up finishing pretty close to average. However, many of the fields I have seen look very behind on development and there is evidence that the wet spring followed by hot and dry have had an effect.
What might be giving us a clearer picture is the NOAA's Vegetation Health change from last year. Here we can see that, year over year we are looking at a much different situation. This might be giving us a more complete story of where this corn crop stands right now:
The drought conditions are obviously represented in the Dakotas, but look at Iowa, Southern Minnesota and Central Illinois. Now keep in mind that last year we set a new record National average yield at 174.6 bushels per acre, but the current USDA (trend-line) yield estimate is not far off at 170.7 bu/acre.
The current two week forecast is a bit wetter than what we were looking at last week and some rain could go a long way after the heat we have seen. However, I do wonder if there has been some damage done already that could make it very difficult, maybe nearly impossible to hit the USDA's yield and production estimates. With seemingly very little weather premium in the corn market it will be interesting to see how things look in a few weeks.
We have complimentary 2017 commodity reference calendars available. They are a little bigger than pocket sized and very useful if you follow markets. You can sign up for yours here - http://www.zaner.com/offers/calendar.asp (Shipping to the US only)
Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action. Ted Seifried - (312) 277-0113. Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.Follow me on twitter @thetedspread if you like.
JulyCorn Daily chart:
JulySoybeans Daily chart:
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 [email protected]
Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie
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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.