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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What did the USDA Say on the Feb WASDE?

Posted on 2/9/2016 4:52:03 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

The February USDA World Agricultural Supply and Demand Estimates (WASDE) report was expected to be a bit negative for grain markets.  For the most part is was even more negative than expected, however grains as a whole closed mostly near unchanged.  While this was not a shockingly bearish report it is somewhat impressive that grains were able to resist a strong move lower.  So what did this report say exactly?

For corn the USDA made only slight changes to the demand side of the domestic balance sheet.  Coming into this report expectations were high that the USDA would lower corn export demand the question was by how much?  After 3 weeks of improving export sales there was some questions about whether the USDA would get aggressive on lowering exports.  They decided to cut exports somewhat aggressively lowering projected export demand by 50 million bushels.  At the same time the raised demand for corn used for ethanol by 25 million as well as imports by 10 million bushels.  The end result was a 35 million bushel increase in ending stocks.  This was a little more than expected, but well within the range of guesses.  The more interesting number may have been the global balance sheet where the USDA increased global production by a little over 2 million metric tons however lowered ending stocks based on stronger demand.

For soybeans the USDA made very little changes on the domestic balance sheet with the only change coming from a 10 million bushel reduction in crush demand.  I have been talking about this being a possibility for some time now, and this could be the start of a trend.  On the global side the USDA increased global production by 1.5 million metric tons and ending stocks by 1.14 million.  Again, higher production was somewhat offset by stronger global demand.

Wheat was, once again, the most depressing of the bunch.  The USDA cut wheat exports another 25 million bushels and the domestic carry over went up 25 million bushels to 966 million.  The US carry over in wheat now represents almost half of last year's entire production.  Globally, ending stocks increased by 5.74 million metric tons reflecting the burdensome world wheat stocks.  However, the trade seemed to take this with a grain of salt because there is a good chance that the USDA will have to lower production estimates from at least 3 of the major wheat producing nations.

At the end of the day there was not a lot that was bullish about this report, except maybe for the fact that is was not shockingly bearish and really not new news for anyone.  This may be why grain pieces held relatively well with speculative funds already holding near record positions.  This report, for the second month in a row, may not have been what the large shorts were looking for.  Next we will focus on the South American harvest and the Spring planting season in the US.

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. 

March Corn Daily chart:

 

March Soybeans Daily chart:

March 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 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


Have Grains Run Out of Steam For Now?

Posted on 2/9/2016 4:21:47 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

Grain markets as a whole have had a positive start to 2016 with corn over 20 cents off the low, soybeans about 25 cents off the low and wheat almost 20 cents off the low.  With a less-bearish-than-expected report in January and some short covering from the funds the idea has been that maybe the most negative fundamental news is now behind us.  Producer selling however has picked up on the bounce and had limited the gains.  After trading mostly sideways recently the grains seem like they could be in an area and time frame where they could pull back.  But, is that it for the rally?

So far 2016 has been ok for the grains.  Corn, soybeans and wheat are now well off the lows.  At the same time the rally, or maybe more appropriately, the bounce has been limited by an increase in producer selling and the outlook for a big South American crop.  In the last few trade sessions the strength in grains has faded into more sideways trade with some sell signals popping up on Thursday.  With the February USDA WASDE report coming up this seems like it could be the right time to get a correction on this bounce.

Corn in particular has preformed well on the idea that maybe the worst of the news is behind us and that it may be struggle this year to gain acreage for next growing season.  And, price action in corn has been pretty good with many days starting lower only to head back to unchanged or higher.  But, here may be the problem for corn right now.  it seems that many days in the recent past corn has had to rally 5 cents or so just to get back to positive on the day.  This has allowed funds to exit short positions without too much influence on the market.  What seems to be happening is that producers are selling corn and the next morning that hedge pressure hits the market.  then buying comes in and picks us back up.  While this positive price action is much better than what we had been seeing late last year, it is also expending a lot of energy just to tread water.

So, with the February USDA WASDE report coming up next week and with generally bearish expectations this could be a likely spot for grains to sell off a bit before that report.  Technically speaking there is also a gap left below the market in corn (363 1/4 - 364 in March) that could be a likely target for a pull back.  Soybean and wheat also have key support areas 8-12 cents below the market.

Longer term however, I do wonder if grains need to go back and retest the lows.  While it would not be uncommon for a multi-year bear trend to take some time to carve out lows I do also think that the worst of the news may be behind us.  Grain stocks both domestic and abroad are huge.  South America is producing a monster crop.  Global equity markets are shaky.  The US$ is very strong...  these are all talking points that have been keys to the grain markets for many months now.  Looking forward the narrative may be more along the lines of -  Producers planting less acreage due to tight profit margins, global equities markets stabilize, US$ coming off it's highs, and (maybe most importantly) weather fears grow going into the growing season.  Now we may be a long way from any of these things actually happening if at all.  And, things could certainly get worse before they get better.  But, how much worse?  Is the billion dollar question.

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. 

March Corn Daily chart:

 

March Soybeans Daily chart:

March 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 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


0

Posted on 2/9/2016 2:11:48 PM by: Larry Baer, Market Strategist @ Zaner. 312-277-0112.

Call me for trade

 


Options Play: Corn, Soybeans, and the Report

Posted on 2/7/2016 9:48:12 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: Corn, Soybeans, and the Report

What fundamental "event" will cause higher grain prices?

 

Fundamentally, maybe the upcoming USDA supply/demand and crop production report will be that fundamental "event" that causes higher prices. Remember when it comes to the report the determining factor usually lies in the expectations. Maybe it will be a lower USD Index. Lately, the USD Index has had a pretty violent sell-off causing an abrupt change in trend to the downside according to my favorite technical indicators. Maybe it will be increased demand from China. Although poor recent economic data and increased domestic production would make that unlikely. Maybe it will be El Nino/La La Nina weather patterns. Although the forecast for harvest in South America is still favorable, we have already seen some pretty eratic and unpredictable weather up to this point in 2016. Which one of these fundamental "events" will it be that causes grain prices to go higher? Will it be a combination of them? Will it be something different? Or will it be none at all?

 

 

Technically, my support areas in both the Corn and Beans have held to my satisfaction. My major support area in the Corn market is $3.50/bushel and in the Beans $8.50/bushel and over the last several days we have tested these areas many times and held. I have added my favorite technical indicators to the charts below. I have coined them the "10/20/50/BB Trend Finder". They are the 10 (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 this daily chart each bar represents one day of trading). These few technical indicators can tell me many, many different 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.

 

  

Options on Beans for People Who Don't Know Beans About Options:

http://www.zaner.com/offers/?page=8&ap=mmckinne

 

In addition to were support is, these indicators on the daily charts tell me that Soybeans and Corn are in a sideways trading range and the markets seem to be building a base. This is fairly easy to determine as all of the indicators in my "10/20/50/BB Trend-Finder" are pointing sideways. The big question then is, are these markets building a base to move higher or lower?

I figured all this out by putting my "10/20/50/BB Trend Finder" on the daily and charts above and applying these indicators to the charts at the click of a mouse which I found at: http://www.markethead.com/2.0/free_trial.asp?ap=mmckinne , which is a web application that we have developed for our clients called MARKETHEAD where I get about 70-80% of all my research from. That means I get both technical and fundamental research from this web app and I am a veteran series 3 Broker of 17 years. So if I'm using it then maybe my readers should check it out. Yes? 

 

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 with options on futures. There could be upcoming trends in the energies, indices, financials, precious metals, softs and more.

25 Option Strategies: http://www.zaner.com/offers/?page=11&ap=mmckinne

 

FREE QUOTE- "I pray every night, sometimes long prayers about a lot of things and a lot people, but I don't talk about it or brag about it because that is between God and me, and I'm no better than anyone else in God's sight." - Peyton Manning

 

 

 

 

 

 

 

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.


Are Corn Acres going Up?

Posted on 2/4/2016 12:15:05 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

A hot button topic for the grains markets in the next few months will be US planted acreage for 2016.  The trend over the last few years has been more soybean acres and less corn and acres with wheat acres holding mostly steady.  This year however, many analysts are looking for an increase in corn acres, steady soybean acres and lower wheat acres.  So far we have seen that winter wheat seedings were well below expectations.  Does this mean that corn acres are going up?

Corn acres have seen a steady decline since setting a record of 97.3 million in 2012.  According to the January USDA WASDE report the US planted just 88 million acres of corn in 2015, this represents a drop of over 9 million in 4 years.  This happened for good reason.  In this same time frame soybean prices stayed strong relative to corn prices as global demand (especially from China) stayed very strong, weather was more beneficial to the US corn crop than soybeans, and globally producers pushed to increase oilseed production while trimming corn production.  While corn acres declined roughly 9 million between 2012 and 2015 soybean acres have increased almost 6 million.

Before the 2015 growing season the acreage discussion was focused on the idea of more soybean acres and less corn acres based on the idea that producers (and bankers) would choose to plant the crop that cost less to grow and therefore represented less risk - soybeans.  And, to a great extent this is what happened.  This year however there have been many analysts suggesting that since the corn/soybean price ratio is more favorable for corn this year that more corn acres will get planted.  While I do think this is a positive draw for more corn acres I am concerned that the "risk based decision" of last year is still very much in play again this year, maybe even more so.

While it is true that it is easier to justify more corn acres this year based on price comparison between corn and soybeans there is still significant risk that producers will be growing corn for more than they can sell it for.  Such is that case for many producers at current price levels.  I've had many conversations in the last few weeks with both producers and bankers and it seems that there are a lot of guys that are look to or needing to avoid another major risk this year.  I hear time and time again that bankers are tightening lending limits and that there will be some tough decisions to make.  One of those will be what to do with marginal ground.  At $3.90 December corn do I take the risk on acres that may or may mot yield well?

Another consideration here is where the biggest shift in corn acreage occurred.  In particular if you look at the northern states (Dakotas and Minnesota in particular) large amounts of corn acreage was lost because of very poor basis caused by rail competition with oil coming from the Bakken.  This situation has changed dramatically and corn basis has returned to more normal levels.  However, is $3.90 December corn attractive enough to get corn acreage to come back?  Time will tell.

This conversation will heat up and become one of the driving factors for the grain markets in the weeks, months to come.  What corn, soybean and wheat prices do in the mean time may have a big impact on where acreage ends up.  The way things stand right now it is difficult to predict how acreage will end up.  On one hand you have a better price relationship for corn (vs soybeans) and you have a better basis in the NWCB.  On the other hand profit margins have been squeezed tightly in the last few years and it has gotten to the point that many producers may need to cut back, especially on marginal acres.  In the end, if prices are similar to where they are now I wouldn't be surprised to see acreage drop as a whole.

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. 

March Corn Daily chart:

 

March Soybeans Daily chart:

March 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 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


Ag Hedge: Higher CBOT Wheat Prices and Ergot.

Posted on 2/3/2016 8:16:57 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.

 

Ag Hedge: Higher CBOT Wheat Prices and Ergot.

After holding critical support it looks as if the Wheat market could bounce up.

 

Fundamentally, prices in the Wheat market could be impacted by Egypt's new requirements. Egypt, the world's number one purchaser of Wheat, has imposed some requirements on the Wheat they will buy. It must be completely absent of Ergot. Ergot is a fungus that produces alkaloids that can cause ergotism in humans and mammals. From what I can tell it's one nasty disease that can cause major anxiety, vertigo, and psychosis. Physically, it can cause gangrene.

 

Since Egyptians consume a lot of bread I can certainly understand why they would not want to mess around with this disease, although if these requirements cause an issue with supply coming into the country we could see a different sort of problem in Egypt. In the past there have been riots and major social unrest as a result of price increases in Bread. Personally I would rather run the risk of riots and social unrest than face on outbreak of ergotism. In the end, the impact that this will have on prices remains to be seen.

 

Technically, my support area in CBOT Wheat has held to my satisfaction. My major support area in this market was at about $4.60/bushel. I have added my favorite technical indicators to the chart below. I have coined them the "10/20/50/BB Trend Finder". They are the 10 (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 this daily chart each bar represents one day of trading). These few technical indicators can tell me many, many different 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.

 

For our report on The 50 most common reasons traders lose money click here: 

http://www.zaner.com/offers/?page=7&ap=mmckinne

In addition to were support is, these indicators on the daily chart tell me that the CBOT Wheat is in an upward trend and poised to make a big move higher. This is fairly easy to determine as 3 out of 5 of the indicators in my "10/20/50/BB Trend-Finder" are pointing up and the market is trading above the 10 and 20 SMA's.

I figured all this out by putting my "10/20/50/BB Trend Finder" on the daily chart above and applying these indicators to the chart at the click of a mouse which I found at: http://www.markethead.com/2.0/free_trial.asp?ap=mmckinne , which is a web application that we have developed for our clients called MARKETHEAD where I get about 70-80% of all my research from. That means I get both technical and fundamental research from this web app and I am a veteran series 3 Broker of 17 years. So if I'm using it then maybe my readers should check it out. Yes? 

 

Ag Hedge Recco:

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 important to note that each farming operation is different and there is not a one size fits all.

 

25 Option Strategies: http://www.zaner.com/offers/?page=11&ap=mmckinne

 

FREE QUOTE- "Everybody wants to go to Heaven, but no one wants to die to get there!" -B.B. King

 

 

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.


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