USDA Crop Report

News & commentary on the USDA Crop Report and Grain Futures markets including wheat, soybeans, corn & more

USDA Crop Report is a blog dedicated to bringing updates, news and commentary on the USDA Crop Report and the grain futures markets including wheat, corn, soybeans and more.

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Options play: Big upcoming week for corn, beans?

Posted on 3/28/2015 8:06:22 AM by: Matt McKinney, Market Strategist @ Zaner. 312-277-0115.

Direct-312-277-0115, http://www.mmckinneyfutures.com/

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.

 

Options play: Big upcoming week for corn, beans?

With another USDA report around the corner could the impact on grains prices be as big as some anticipate?

 

Fundamentally, on Tuesday we have a quarterly grain stocks report that could have a huge impact on prices. Specifically, it's called National Agricultural Statistics Service(NASS) report from the USDA and it will let us know where the USDA thinks we stand on supplies of grains. The description of the report acordding to the USDA is "a full-text report, issued four times yearly, contains stocks of all wheat, durum wheat, corn, sorghum, oats, barley, soybeans, flaxseed, canola, rapeseed, rye, sunflower, safflower, mustard seed, by States and U.S. and by position (on-farm or off-farm storage); includes number and capacity of off-farm storage facilities and capacity of on-farm storage facilities. Continues Stocks of Grains. In addition, that same NASS/USDA will also have a report called the Prospective Planting report. The description of this report is "This ASCII text file reports the expected plantings as of March 1 for corn, all wheat, winter wheat, durum wheat, other spring wheat, oats, barley, flaxseed, cotton, rice by length of grain classes, all sorghum, sweet potatoes, dry edible beans, soybeans, sunflower, peanuts, and sugarbeets; acreage for harvest of oats, hay, and tobacco".

These two reports will probably be more bearish than what analyst are thinking in my view for corn and beans. According to Hightower on the corn, "The IGC estimated that world corn production would come in at 941 million tonnes in 2015, down 49 million tonnes from last year, mostly due to lower yields.....Analysts see March 1st stocks at 7.609 billion bushels (range 7.459-7.800) from 7.008 billion last year".

In terms of soybeans Hightower reports, "Analysts see March 1st stocks at 1.346 billion bushels (range of 1.250-1.413 billion) which would be up from 994 million last year. Planted acreage is estimated at 85.92 million with a range of 83.1-88.0 million and against 83.701 million in 2014. If 88 million acres are planted, ending stocks should come in around a record high of 664 million bushels". Again I believe we will see an even more bearish report than what is expected by the a fore mentioned predictions.

 Technically, I have added my favorite technical indicators to this charts below. They are the 9 (red line), 20 (green line), and the 50 (blue line) day Simple Moving Averages or SMA's. I have also added Bollinger Bands or BB's (light blue shaded area) and Candlesticks (the red and green bars with the candle stick wicks and on these daily charts each bar represents one day of trading). These few technical indicators can tell me many, many important characteristics about the market at a quick glance so I have them saved on my charts in MARKETHEAD, so they can populate on any chart I choose at the click of a mouse.

On the soybean chart below, I have the market in what I refer to has a downward trend. This is simply because the market is trading below the 20 day SMA (green line) and using the indicator as resistance. Also 3 out of 5 of my indicators are pointing lower on fairly sharp angles. The top line of the Bollinger Bands, the 20 day SMA, and the 50 day SMA (blue line) are all bearish.

I think this downward trend could continue in the coming days and weeks and could possibly even become a term I have coined called a "PRINCIPAL-TREND" down. this would be the strongest possible trend. However, in order for that to take place I would need the 9 day SMA on this chart point down instead of sideways and the market would have to then move lower below the 9 day SMA and use it has resistance instead of the 20 day SMA it's using now for resistance. This may occur on the heels of these reports this week.

 

May daily soybean chart

Technically, on the chart below my indicators are showing a classic sideways, consolidation trend. The market is trading in a range between roughly $4/bushel and $3.75/bushel. This I have determine quite simply by looking at the top and lines of the Bollinger Bands. The top line being the upper end of the range and the bottom line the lower end. On the heels of these upcoming reports this market could very well break out of the range and head lower.

 

May daily corn chart

 

 

OPTION PLAY:

For exact details on strategies, months, expiration dates, strike prices, and number of positions feel free to contact me at 312-277-0115 or mmckinney@zaner.com .

It is also important to note that I am not married to a market, but to trends. I believe that we are on the verge of lots of upcoming trends. So get in touch with me and I'll show you what could be right around the corner in terms of trending markets and how to trade them. There could be upcoming trends in the grains, energies, indices, financials, precious metals, softs and more.

 

FREE QUOTE- "If you wait to do everything until you're sure it's right, you'll probably never do much of anything ." -Win Borden 

 

 

 

FUTURES, OPTIONS AND FOREX TRADING IS SPECULATIVE IN NATURE AND INVOLVES SUBSTANTIAL RISK OF LOSS. THESE RECOMMENDATIONS ARE A SOLICITATION FOR ENTERING INTO DERIVATIVES TRANSACTIONS. ALL KNOWN NEWS AND EVENTS HAVE ALREADY BEEN FACTORED INTO THE PRICE OF THE UNDERLYING DERIVATIVES DISCUSSED. FROM TIME TO TIME PERSONS AFFILIATED WITH ZANER, OR ITS ASSOCIATED COMPANIES, MAY HAVE POSITIONS IN RECOMMENDED AND OTHER DERIVATIVES.

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 UNDERDLYING 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 STICKE 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 OPTIONS PRICES MAY ONLY MOVE A LITTLE.

THE LIMITED RISK CHARACTERISTIC OF OPTIONS REFERS TO LONG OPTIONS ONLY AND REFERS TO THE AMOUNT OF THE LOSS, WHICH IS DEFINED AS THE PREMIUM PAID ON THE OPTION(S) PLUS FEES.

 


 

 


Expectations for the March 31st USDA Reports

Posted on 3/26/2015 2:43:50 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

Looking at the average trade estimates for the March 31 USDA Quarterly Grain Stocks and Prospective Plantings reports it strikes me that the average guesses for corn and soybean are a bit different then the private analyst estimates we have been hearing about in the last few weeks.  As one of the participants of the 3 major surveys I really thought I would be at or near the low figure for soybeans acreage with 94.8 million acres and at or near the high figure for corn acreage with 89.4 million.  As it turns out, there is a lot more diversity in estimates then what we have been hearing about in the markets.

For some time now there have been more then a few private analyst estimates and/or producer surveys that have been putting bean acreage in the 87-88 million range and corn acreage in the 86-89 million range (with many well below 88).  This would be a sharp, 4-6 million acre, increase in soybean acreage and a significant drop in corn acreage.  The market may have factored these numbers into the market in recent weeks.  Now however, the average trade guess for corn acreage is just over of 88.8 million acres and the trade guess for soybeans is only 85.9.  This is a lot closer to the numbers we are looking for. 

The prevailing thought in the market is that soybeans will be stealing some corn acreage due to better profitability and lest risk.  Soybeans are the cheaper crop to produce and therefore mean less risk of lower prices.  While we think this will have some impact on planting intentions, especially in the North where basis has been hit hard by rail issues, we do not feel this translates into a 3-5 million acre swing.  The bigger question here is if acres for row crops as a whole will be going up.  This argument is based on the idea that cotton acres will be down sharply and that corn and soybeans will take that acreage.  In our opinion the row crops will get a small amount of acres from cotton but, most or all of this could be offset by increases in alternative crops such as sorghum, barley and sunflowers.

The bottom line is that we would not be surprised to see acreage numbers come in higher then expected for corn and lower then expected for soybeans.  However, as I mentioned the average trade guesses are less extreme than most of the acreage numbers we have heard in the last few months so at least some of the trade seems to be softening on the massive switch in acres.  At the end of the day corn likely will still be looking at a decline in acreage for the second year in a row and soybeans will likely be looking at new record acreage.  If this is the case it might cause a knee-jerk reaction, but it might not take long for the market to figure out we will have more then enough soybean acreage and the potential for a tight corn balance sheet if we were to have a less then perfect growing season.

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 tseifried@zaner.com

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie


Adding Potential to Sold Corn Bushels

Posted on 3/26/2015 1:52:12 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

After a record corn crop in 2014 prices have fallen to levels that put producers profit margins in jeopardy.  To make matters worse many producers did not have the room to sore this bumper crop and were forced to sell at or near the lows of the market.  Producers are now very reluctant to sell corn bushels even now that corn has bounced off lows but cash requirements and storage limitations are pushing some guys to make some sales.  With the outlook for the upcoming growing season and the new crop balance sheet it may make sense to look at recapturing some upside potential on bushels that have been sold.

Recently a sharp drop in the US$ and a very slow pace to planting in the south have added strength to the corn market.  This could continue and with the average trade estimate at 88.9 million planted acres this year corn could be very sensitive to any further planting delays especially if it spreads to the heart of the Corn Belt.  With such low planted acreage estimates it may be the case that anything but a near perfect growing season could mean a tighter balance sheet next year.  So, the recent strength in corn could just be the tip of the iceberg if there were to be any weather issues.

The other consideration coming up is the March 31st USDA Quarterly Grain Stocks and Prospective Plantings report.  This report has a history of being a big market mover.  This same report in 2013 "found" an extra 400 million bushels of corn and sent markets sharply lower in the following three days.  As I look at the average trade estimates I think there could be a chance for a bullish surprise.

In 2013 the USDA reported corn stocks almost 400 million bushels above expectations.  After the drought stricken crop of 2012 the thought was that corn stocks had been very low.  Where was all of this extra corn coming from after a less than ideal growing season.  One possibility is that the USDA was too low on yield, maybe things were not as bad as they seemed.  Another theory, and the one I favor, is that the USDA had been severely underestimating on farm storage and on the trek down form record high prices those bushels came to market.  In the case of the current situation the USDA may not get an accurate picture of on farm storage again and some bushels may get "lost" for the time being.  This is simply a theory, so take it with a grain of salt.

Either way, if the trade estimate of 88.9 million planted acres of corn proves to be accurate it will take a near perfect growing season to keep ending stocks from falling next year.  2014 was a record national average yield and a record production year for corn.  The last two times we set a national average yield record (2004, 2009) we followed up with a 12 bushel and acre decline the following growing season.  If that were the case this year it could drop ending stocks to levels much lower than the current year and possibly lower than the last two.  This could bring a heightened sense of concern on any weather issues this year and if we were to see a weather event that would cut production potential corn prices could need to go higher to slow the demand that has built up at lower prices.

If the higher corn price scenario does play out this year then the opportunity to capitalize on these higher prices will have been missed on bushels sold.  However, we are using some option strategies that will allow producers to recapture some of that potential again.  This is not without risk however, when buying an option you run the risk of that option expiring worthless and losing the premium paid (plus commission and fees).  Because of this we are using strategies that look to keep costs below ten cents per bushel.  Given the setup we have going into this growing season we think it may be worth the risk in the end.

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 tseifried@zaner.com

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie


03/24/2015 Corn & beans waiting for a fresh signal

Posted on 3/25/2015 1:21:06 PM by: Larry Baer, Market Strategist @ Zaner. 312-277-0112.

Call me for trade

 

 


GRAINS ATTEMPTING TO BOTTOM AGAIN?

Posted on 3/23/2015 1:47:55 PM by: Judy Crawford, Market Strategist @ Zaner. 312-277-0133.

They continue to rally today. No doubt the weakness in the dollar is helping. They have managed to get over the resistance referred to in yesterday’s Trade Alert.  Corn had appeared to have broken out of its consolidation to the downside but, as of today, it is right back in that consolidation. If that be the case, the real breakout to the upside increases technically.

In the bean complex, meal is the most puzzling.  It is the most negative long term but did not take out the previous low on the daily chart during last week’s selloff.  So is meal forming a 1,2,3 bottom formation on the daily chart?  Plus it has two buy signals. At the same time beans did take out their previous low last week while their long term charts are positive. Also bean oil is technically becoming more positive. The monthly chart has triggered a preliminary buy this month. That is the first time since January 2012. And the weekly chart is attempting to form a 1,2,3 bottom formation. Technically the grains, once again, seem to be attempting to form bottoms. 


LOOK OUT BELOW!

Posted on 3/18/2015 6:08:06 AM by: Rick Alexander, VP, Trading @ Zaner. 312-277-0107.

E HAVE A VERY GOOD HEDGING DEPARTMENT HEADED BY TED SEIFRIED. WHY NOT TALK TO HIM OR ANY OF OUR OTHER HEDGING BROKERS. NO ONE WILL PRESSURE YOU AND WHAT HAVE YOU GOT TO LOSE? I'VE BEEN A LICENSED FUTURES BROKER FOR 41 YEARS AND TRUST NO ONE MORE THAN TED AND HIS GROUP.

Higher close for rough rice while lower for Minneapolis, Kansas City and Chicago wheat along with corn, soybeans,soybean meal and soybean oil. For a short while the grain complex was holding up better than expected with bearish fundamentals and a strong dollar. However, over the last week the grains, excluding the wheat complex, which is bearish anyway, have tumbled while the dollar has been in a minor correction (so far) lower as the obviously bearish fundamentals have taken over again. Minneapolis. along with KC and Chicago have been making lower highs and lows but at least have eased into a gradual overall decline at their present levels. There's really nothing about this complex to get excited over except when the spreaders buy wheat against the corn and beans which helps hold up the prices at least temporarily. I would still, however, prepare for lower prices which, by now, is a surprise to no one.  Use the following parameters for the May contract at this time: 548-602 for Minneapolis, 516-583 KC and 478-545 for Chicago. Closes above or below these prices should indicate at least the short term direction for a while. Finally, KC and Chicago did have reversal type action today. The oats retracement rally seems to be over and a test of its February lows seem likely since they're still in a strong looking downtrend. Rice continues in an overall bear market while trending sideways since the beginning of February. This doesn't appear to be the best grain to trade at this time as you can see below. If you like getting chopped up like an onion, then this is the market for you!  Corn had is worst low and close since October of last year which pretty much says it all. There's quite a lot of resistance overhead and nowhere to go but down since the beans and meal recently bounced off of good resistance areas then heading back down. The gradual building up of the cattle and hog herds should help support corn down the road since most corn does goes into feed. Looking at the charts below you can see how the beans and meal have progressed since butting heads with good resistance areas and failing the test. The beans made their worst low and close since October and the meal January. Oil has 'fallen out of bed'  since its last retracement rally peaked at the beginning of March in reversal type action. SELL SIGNALS FOR MINNEAPOLIS, KANSAS CITY AND CHICAGO WHEAT ALONG WITH CORN, ROUGH RICE, SOYBEANS, SOYBEAN MEAL AND SOYBEAN OIL. For additional charts, quotes, news, commentary & more, sign up for
for a FREE 30 -day trial to markethead.com.

 

               


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