Sunday, February 27, 2011

Neutral Nick Grain Marketing Plan Updated - Volitale Markets are beating him up!

With the very volitale markets our grain marketing character Neutral Nick has been getting whipsawed by the recent price action in the commodities.  Last week Nick found himself with a Delta bushel equvialent that was long in a couple grains; this while he had a grain price action target of being equal to having 100,000 bushels of each corn, soybeans, and CBOT wheat sold.

Bottom line is early in the week Nick was

Friday, February 25, 2011

End of Week Charts for Corn, Wheat, Crude Oil, Beans - Technical buy/sell levels

Markets ended the week with some strength; the markets movement this week reminds me of trading spring wheat in 2008; fun at times; but sickening at times .  It might not be quiet as extreme but it feels like it has many more unanswered questions then it did back then.  Questions like when will demand curve, will we run out of corn, and will we some how get enough supply to meet what appears to be very strong demand.  I guess only time will tell.

I personally think that

Trade Comparison - Producer Hedge Strategy and Couple of charts on commodities!

opening grain market comments 2-25-11

Markets are called firmer this a.m. behind supportive outside markets and good export sales.

In the overnight session corn was up 5-7 cents, beans where up 3, KC wheat was up 6-8 cents, MPLS wheat was up 5, and CBOT wheat was up 8-10 cents.  At 8:50 outside markets have European wheat firm up about 3 %, the DOW is up 40 points as the equities are slightly firmer, crude oil is down about 30 cents a barrel, and the US dollar is firmer with the March up 289 at 77.390.

It appears that the roller coaster ride for the grains wants to continue; this a.m. the ride just isn’t quite as exciting as it has been the past week or so as most of the grains couldn’t manage even a 10 cent trading range in the overnight session.  So it appears for this second that we could have a little quieter market then we have had the last week or so.  Having said that we do have a USDA Outlook Forum going on now and obvisioully plenty of outside influeces have been around lately and likely continue to effect our markets; but right now it appears we won’t see the dollar plus range we did for some of the grains Monday night threw Tuesday a.m.

The good thing I see out there with the volatile markets we seen to start the week is the fact that the trading range we had should help set up well defined support and resistance.  Overall it was great to see the grains bounce well off of their lows; that fact and this a.m.‘s export sales show that someone has interest in buying or selling has started to slow down.  The fact that fund liquidation appears to be slowing was one fact my broker mentioned this a.m.

In regards to export sales we seen corn put in a great number; the best of the year and when we put in the best consumptive demand numbers at the time of the highest prices it shows overall fundamental strength in my opinon.  Corn sales came in at 59.1 million bushels which is more then 2 times what we need on a per week basis.  Wheat came in at 37.1 which is towards the top end we have seen since late August; or nearly 3 ½ times what is needed on a per week basis to meet current USDA projections.  Beans where on the light side as they only came in at 4.9 million bushels and failed to hit what we need on a per week basis to meet current USDA projections.

Spring wheat basis is on fire on the spot floor; mainly logistics but it does feel like there is also good business behind it.  Yesterday we sold some deferred slots that traded much higher then they do historically that far ahead of time for that slot; part of that is do to the upfront strength but it also says to me that the overall world lacks great quality on wheat and our demand is continuing to improve.

As for the volatility don’t look for it to go away for any extended period of time as we have too many unknowns and the outlook forum shows the overall tightness expected with good demand for years to come.

Don’t forget about our marketing meeting that is March 7th in Ft Pierre and March 8th in Philip.

Wednesday, February 23, 2011

Wheat trade? Hedge? Couple Corn Market Charts

 Markets showed good life today; as most grains managed to close 30-40 cents off fo the lows.  We opened the doors to the question what recent move was a correction and where is the trend going from here.  Did the grains manage to bounce in a corrective nature or has the pressure seen recently (up until today's bounce) the correction before moving higher????

Below are a couple corn charts as well as a wheat strategy that as a producer could

Tuesday, February 22, 2011

Neutral Nick - Charts - Horrible Day for Grains to start week.

Over the weekend issues over seas had the world on edge; this lead to crude up over 7.00 a barrel; but that same political unrest lead to taking risk off of the table which ended up leaving most grains near limit down.  Add to that a bill

Saturday, February 19, 2011

Neutral Nick updates

Yesterday I shared Neutral Nick's updates as March Options expired.

Today we have some info on projections and his trades he added to get him back to 100,000 bushels delta equavilant of grain hedged or sold.

Friday, February 18, 2011

Close week on a Sour Note; March Options expire Neutral Nick update

Grains closed the week on a very sour note with pressure big pressure in beans and wheat; while corn closed weaker as the spill over pressure to the current king of the commodities was just too much to over come.

The weakness in the grains seemed to come from ideas of an import tax on food items into China to help with their inflation.  This along with perhaps fundamental supply (increasing) and demand (decreasing) in the soybean market lead to pressure that as mentioned above was just too strong for the other grains to do much about.

As for overall market idea's I don't know if they really should have changed over the past couple weeks; I would aggree that South America appears to be getting more exports and the size of thier crop has been getting reported bigger while a few weeks ago that crop was getting smaller.

As for the inflation and import tax issues that China has thrown into the mix. I don't know that I buy it; as it has felt that demand is real and the only way to fix it might actually be to be super buyers and have the stock of food on hand so that they feel comfortable. 

Technically corn looks good and the recent correction perhaps help set tighter risk parameters to trade by.  Wheat and beans look rather subject; but if corn is king; then those other grains might just have to come along for the ride wether they want to or not.

Today was option experation and with that Neutral Nick exited all positons in the March.  You can see that just a few days ago he left most of them and the balance where exited at today's close.

Below is a recap of all of his March positions; the ones not showing an offset where offset at today's close those he uses the actual profit/loss column.

Long# ofOptionFuturesExpirationMy TradeFutures PriceOption PriceProfits (Losses)
or ShortContractsSymbolReferenceDateDatePriceLastLastActual
SHORT5.00CH660CCH118-Feb-20117-Jan-201115.375 709.750 49.875  ($8,625)
LONG5.00CH660CCH118-Feb-201115-Feb-201131.375 709.750 49.875  $4,625
LONG6.00CH660PCH118-Feb-20118-Feb-20118.250 709.750 0.000  ($2,475)
SHORT6.00CH680CCH118-Feb-201129-Dec-201020.000 709.750 29.875  ($2,963)
SHORT2.00CH680CCH118-Feb-20115-Jan-201118.500 709.750 29.875  ($1,138)
LONG4.00CH680CCH118-Feb-20118-Feb-201111.125 709.750 29.875  $3,750
LONG4.00CH680CCH118-Feb-201115-Feb-201114.750 709.750 29.875  $3,025
SHORT35.00CH700CCH118-Feb-201123-Dec-201016.500 709.750 9.875  $11,594
LONG20.00CH700CCH118-Feb-20112-Feb-20117.375 709.750 9.875  $2,500
LONG19.00CH700CCH118-Feb-201114-Feb-20116.125 709.750 9.875  $3,563
106.00 $13,856
SHORT4.00SH1300CSH118-Feb-20117-Jan-201193.875 1368.000 68.125  $5,150
LONG4.00SH1300CSH118-Feb-201115-Feb-201168.875 1368.000 68.125  ($150)
SHORT5.00SH1300PSH118-Feb-201129-Dec-201034.500 1368.000 0.125  $8,594
SHORT15.00SH1300PSH118-Feb-201112-Jan-201113.125 1368.000 0.125  $9,750
SHORT5.00SH1360PSH118-Feb-201112-Jan-201130.500 1368.000 0.125  $7,594
LONG5.00SH1360PSH118-Feb-201115-Feb-20118.750 1368.000 0.125  ($2,156)
SHORT5.00SH1380PSH118-Feb-20118-Feb-20114.125 1368.000 12.125  ($2,000)
LONG5.00SH1440PSH118-Feb-20118-Feb-201124.000 1368.000 72.125  $12,031
SHORT5.00SH1440PSH118-Feb-201115-Feb-201172.750 1368.000 72.125  $156
SHORT2.00SH1450CSH118-Feb-20115-Jan-201143.500 1368.000 0.125  $4,338
LONG20.00SH1460CSH118-Feb-20112-Feb-201120.750 1368.000 0.125  ($20,625)
75.00 $22,681
SHORT3.00WH730CWH118-Feb-20117-Jan-201168.125 822.250 92.375  ($3,638)
SHORT20.00WH750PWH118-Feb-201119-Jan-201113.875 822.250 0.125  $13,750
SHORT2.00WH770PWH118-Feb-20115-Jan-201127.375 822.250 0.125  $2,725
SHORT7.00WH830PWH118-Feb-201115-Feb-20116.750 822.250 7.875  ($394)
LONG15.00WH850PWH118-Feb-20118-Feb-20119.875 822.250 27.875  $13,500
SHORT8.00WH850PWH118-Feb-201115-Feb-201117.125 822.250 27.875  ($4,300)
LONG30.00WH870CWH118-Feb-201126-Jan-201125.000 822.250 0.125  ($37,313)
LONG8.00WH870CWH118-Feb-20112-Feb-201123.000 822.250 0.125  ($9,150)
LONG5.00WH880CWH118-Feb-20118-Feb-201117.750 822.250 0.125  ($4,406)
98.00 ($29,225)

You can see that he managed to lock in some profits; but not nearly as much as he would of liked.  The good thing is that his projected at experation keeps getting bigger.

Along with having to exit all March positions Neutral Nick did have to get back to 100,000 bushels sold on each of his three grains.  Look to see that info later this weekend along with some "what if" charts.  Hopefully the "what if" charts will help give his banker some comfort in all the margin loans he has extended or maybe he will be the one not sleeping well at night?