Change of Trend or Dead Cat Bounce in Grains?
Apr 14, 2015
TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY 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.
The fundamental set up for grains has been mostly bearish for some time now. While demand has been good, especially for soybeans, record crops in the US and large global supplies have cast a negative shadow over grain markets. However, this is old news and in the relatively near future the trade will begin to focus on the new growing season. While we do have some reasons to be more optimistic, especially for corn, in the new growing season we may not be quite ready yet.
Weather will become a major driving factor in the months to come. For the moment the trade is looking at early season planting weather as bearish. With all of the rain in the Eastern half of the corn belt and the dryness in the Western half weather at some point may become a bullish factor for corn in particular. If the soggy weather persists in the East the trade may get worried that some corn acres could be lost from an already lower acreage number. And, if the dryness persists in the West the trade may get concerned about yield potentials. But, for now there is a lot of time to get planted and get rain so it may be too early for markets to start to add weather premium.
For soybeans it is difficult to imagine a bullish planting weather situation aside from planting delays persisting all the way into June. If planting delays keep some corn acres from getting planted this could mean more soybean acres. If planting goes smoothly and quickly we could see overall acreage increase and soybeans could not only stand to gain acreage but could also see an increased yield potential. In the mean time demand has gotten softer as global demand for soybeans and soybean products has shifted to South America.
We have some complimentary 2015 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
The bottom line is that, short of a deeper correction in the US$, we are not likely looking at a change in trend for grains. It is likely too early to get excited about planting delays for corn and it is difficult to see a bullish planting scenario for soybeans. However, in weeks and months to come the attention will shift more to the new crop and the growing season may offer reasons to be more optimistic on pricing at some point.
Please 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.
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. Also, follow me on twitter @thetedspread if you like.
May Corn Daily chart:
May Soybeans Daily chart:
May Wheat Daily chart:
All this means that speculators should be looking for opportunities and producers need to look to lock up some prices. 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
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.