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.
This growing season has had it's fair share of issues. A wet planting season followed by periods of hot an dry has cause some crop stress, especially in the Northern Planes. With crop conditions coming down going into the July World Agricultural Supply and Demand Estimates report the question is - Will the USDA lower yields for corn and soybeans?
As of July 9th soybeans are rated 62% good to excellent compared to 71% last year at this time. While this is a significantly lower crop rating than last year the key development state of soybeans is not until August. For that reason the USDA has historically been very reluctant to change soybean yields earlier in the growing season. For the last 15 years the USDA has left the soybean yield unchanged on the July report almost every year with one notable exception - 2012 when the soybean crop was rated at a miserable 40% good to excellent (on July 9th 2012).
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For corn there is a similar situation as far ac current conditions go. As of July 9th the corn crop was rated at 65% good to excellent compared to 76% last year at this time. Here too the USDA has been reluctant to make big changes on yield in July reports because July is the key development month for corn. While historically there are a few more changes in yield in the July report than for soybeans the changes are mostly small with again one exception - 2012 when corn conditions were also only 40% good to excellent. Other small changes came in 2003 when they raised yield 3 bushels an acre and in 2005 when they lowered yield 3 bushels an acre.
It seems rather unlikely that we will see much of any change in the soybean yield on the July WASDE report. Corn is more interesting, but again the USDA prefers to play it safe and punt for the August report where we can see bigger adjustments. While it is possible that the USDA feels the recent decline in corn conditions and the 11% lower good to excellent rating could justify lowering the yield it seems that more than a 3 bushel an acre reduction would be a big surprise. And again, more often then not (14of the last 17 years)they leave it unchanged.
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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.
DecemberCorn Daily chart:
NovemberSoybeans 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 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.