Sign up for our Morning Ag Hedge newsletter!
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.
So far December corn has been able to hold the August 31st lows. However to this point the bounce off the lows has not been impressive. With early harvest results suggesting that the crop is near the USDA's national average yield estimate of 170 bushels per acre corn has had a hard time finding any upward mobility. So what could help corn find higher prices?
December corn posted a key reversal on August 31st and so far this has held as the seasonal low. Traditionally harvest lows would come in October or November but they have been coming early in the last few years. Part of the reason for this could be that producers have held on to massive stocks of old crop corn looking for higher prices only to have to sell off those stocks at the last minute to make room for the incoming harvest.
This year it might be difficult to make a bullish argument for corn. Yields seem to be better than expected as bouts of hot and dry conditions did not have as big of an effect on the overall crop as was originally thought. There are massive old crop stocks available too and the market seems to be flooded with corn for now. Short of a new source of demand for corn it might be difficult to imagine the fundamental picture changing in the near future.
This could mean that if corn is going to find some strength it might have to come from somewhere else. With the large speculators building a large short position its possible that something outside the corn market could trigger short covering. A rally in soybeans or wheat could (but not necessarily) provide that spark. Wheat might not have much of a story anytime soon either, but the soybean market could. With strong demand in recent weeks there could be a story if soybean yields were to come in below the USDA expectations. If this were to happen it could be the spark needed to get corn to find some strength.
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.
December Corn Daily chart:
November Soybeans Daily chart:
December Wheat 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
Sign up for our Morning Ag Hedge newsletter!
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.