Tuesday, May 31, 2011

But Everyone already knew! So why was Wheat price down so hard today?

But everyone already knew that Russia was going to have a better crop then a year ago and everyone already knew that they where going to be back into the export market.

That was the cry the bull's had today as our markets got smack on what was suppose to be news that really wasn't a suprise.  So why did our markets get smacked so hard today?

Maybe the charts below will shed a little light on it; maybe they will just make one wonder even more?  The one thing that is clear is that technically the CBOT wheat's price action as well as KC price action really left some clues last week in the form of near doji's left on the charts as well as failures at resistance levels.  The MPLS chart below isn't as clear and to me looks a little more freindly then it's wheat sister's in CBOT and KC.

Opening Comments 5-31-11 Grain Market Called weaker on Russia News to lift export ban

Markets are called mixed this morning behind a volatile over night session and supportive outside markets. 

When the overnight session was over old crop corn was up 2 cents, new crop corn was down 4, MPLS wheat was off 11 cents, KC wheat was down 17, beans where up a penny, and CBOT wheat was down 18 cents.  At 9:00 outside markets have European wheat up about 1 % (after being off nearly 5% yesterday), crude is up about 1.80 a barrel, and the equities are firmer with the DOW up 100 points.

The big news over the weekend was Russia lifting their wheat export ban; effective July 1st.  Some rumors are already out there on business done because of this.  Many have expected this in the market for some time now; but the actual news lead to a hard sell off in the European wheat market; as yesterday European wheat lost nearly 5% which on 8.00 wheat is 40 cents and 10.00 wheat is 50 cents.  Last night our markets opened down rather hard on this news and the European weakness as we seen wheat down 35 cents or so on the CBOT; while the hard wheat’s where down nearly 30 at their lows. 

Despite the weakness seen where the overnight left off things at one time where quiet a bit worse as even old crop corn was 15 cents off of it’s overnight session lows.

We will have a crop progress update this afternoon which is expected to show corn planted in the 82-90% area and rather little change expected in spring wheat planting.  Crop conditions will also be out in this afternoon’s update.

This a.m. we will have an export inspections report out showing export shipments.

 Please give us a call if there is anything we can do for you.

Friday, May 27, 2011

Charts for Grains - Corn, MPLS Wheat, CBOT Wheat, Soybeans, Spread Charts 5-27-11

Here are some various charts with various studies including the Tee Line - 8 Day Expontial Moving Average, Stochastics and various trend lines.

Another Neutral Nick Update via the nice and volatile commodity (grain) markets.

It looks like our Mock grain trading character Neutral Nick; who has a grain marketing plan of staying short delta bushels of 100,000 bushels for each corn, soybeans, and CBOT wheat had another update today.  He is using the a delta neutral hedging type of style........but instead of long options Nick is normal just short options.  Basically if his bank roll is big enough he thinks his program or grain hedging style will add more money to his bottom line via selling the volatility and riding time out thus picking up Theta.

Today Nick did something a little different then normal..........he bought back in the money options that had seen much of the time erosion go by and then to keep on the theme of always collecting premium he sold options that helped he get close to his grain marketing plan goal of being short 100,000 bushels.

With the market movements lately Nick found himself buying in the money call options while he sold at or near the money put options.  Net he still collected money and the good thing that Nick has had going for him self is the fact that he is now up about 6.9 million dollars.

Keep in mind the risk that he is taking and the fact that it isn't suitable for many if any; plus past results don't mean the same thing happens in the future.

To get back towards 100,000 bushels Nick made the following trades.

He purchased 500 of the 7.00 July Corn calls and sold 1865 of the July 750 corn Puts. 

In CBOT July wheat he Purchased 500 of the 7.50 July Wheat calls and sold 2555 of the July 8.00 puts.

In July Soybeans he purchased 100 of the July 13.00 Soybean Calls and sold 272 of the July 13.80 Soybean puts.

I would note that as I was going threw Nick's trades and possiblities on what to do to get back towards his goal on bushels sold the thought of simply buy back or closing all of his positions cross my mind.  After all if you don't go broke making sales that make sense how would he go broke locking in nearly 7 million dollars in profits on his hedge account.  Call it fake greed if you will but I decided to adjust in a different manner and ride it out.  The good thing that Nick has going for him time value; he is down to just a few weeks.

Below are updated P and L Graphs.

Tuesday, May 24, 2011

Neutral Nick update

Well we are done to a month to the day.

The day that the options expire that our Mock Grain Marketing Character Neutral Nick has been using; it has been a long rather stressful ride for him in these volatile markets.  Nick stil has a chance to make it huge; but he also has a chance to lose the farm in the finally few weeks if he doesn't do a good job managing his very much over leveraged position.

Grain Markets - Opening Calls June 24th; Mixed calls for commodities!

The grain markets are called mixed this a.m. behind a mixed overnight session and mixed to supportive outside markets.

In the overnight session old crop corn was down 5 cents, new crop corn was up a penny, beans where up 6-8 cents, KC wheat was off a penny, MPLS wheat was down 2, and CBOT wheat was off 6 cents.  At 9:15 outside markets have European wheat off about 1%, crude is up about 2.00 a barrel, the US dollar is weaker with the cash index down 211 at 75.893, and equities are bouncing a little this a.m. with the DOW up 33 points.

Monday, May 23, 2011

Buy High and Sell Low ..........Right???

Buy High and Sell Low ..........Right???

Only when fear and greed rule one's marketing plan.............don't let them stand in your way as in grain marketing and trading the objective is to buy low and sell high!

Opening Grain Market Comments 5-23-11

The grain markets are called mixed to weaker this a.m. following an overnight session that started off firmer but faded weaker throughout the night on the heals a weaker outside markets lead by a firmer US dollar and crude oil pressure.

In the overnight session old crop corn was off a penny, new crop corn was off 4-5 cents, beans where down 3-7 cents, KC wheat was off a nickel, MPLS wheat was off 3 cents, and CBOT was off 11 cents.  At 8:35 outside markets have European wheat off about 1 %, equities have just opened with the DOW down 170 points, crude is off about 3.20 a barrel, and the US dollar has the cash index up 863 at 72.298.

It is very early to call; but it looks like a risk off day; which probably isn’t the best for the grains and commodities considering the amount of ownership the funds and index funds still have in our markets.

The story today is much like the past couple of week’s overall we have friendly fundamentals but the outside markets have been very hit and miss thus causing a clash between the two; add to that the volatility has created battles between the technical’s and fundamentals from time to time.  As example most of the grains have moved back up to resistance levels and reached over bought status.

Look for another day of volatile markets as we move forward.  We will have export inspections out this a.m. and this afternoon a crop progress report that is expected to show corn planting near 80 % finished.

Please give us a call if there is anything we can do for you.

Also don’t forget we will have another session of MWC Marketing Hour Round Table this Wednesday in Onida at 3:30.  We will go over some charts, strategies for marketing, and then place some mock trades; everyone is invited; but please RSVP as space is limited.

Thursday, May 19, 2011

Market rally over or just starting?

Here are a look at a couple of charts; as I ask questions like should one sell the rally or buy the break.  Is the present commodity price up move nearly over or just getting going?  Have we seen the highs on old crop corn, near crop corn, wheat, soybeans, crude........the low in the dollar in? 

Here are some charts that might help you with your opinion of the above; as for me; I will stay on the neutral side and leave things with a statement.  You don't go broke making sales that make $ense.  So from a risk managment grain marketing plan prospective nothing wrong with making a profitable sale.

As for the other questions; my view is that maybe old crop corn has a little story left in it; but personally I think any additional rally in some of the other grains will be much slower and harder then the rally we seen this past week.  Meaning a rally to new highs can be done but I am leaning towards the bearish side; which might prove wrong as the past week I don't think anyone would have wanted to stand in front of the freight train we have seen for wheat, corn, and soybeans. 

Here are some charts showing some technical points of interest.

Neutral Nick Update Shell Shocked via commodity price movement

First off I want to wish my wife Happy Anniversay!

As for our MOCK trading character Neutral Nick; he got shell shocked so to speak; as he like many producers has been a little busy; and he found his hedge account not where he wished it to be.

A couple days ago Nick looked at where his hedge account was in regards to profit/loss; before the movements the past several days he was up around $5 million dollars in profits; while yesterday his acount had fallen all the way back to around even; after the drop in volatilty his account today showed gains off about 1.3 million.

Tuesday, May 17, 2011

Grain Market Comments for a very strong session - May 17th grains closed higher

Markets are called mixed this a.m. behind a mixed overnight session and weaker outside markets.

IN the overnight session CBOT wheat was up 1 cent, MPLS wheat was up a penny, KC wheat was off a penny, new crop corn was up 5 cents, new crop beans where up 7, old crop corn was up 7, and old crop beans where up 4 cents.  At 9:25 outside markets are weaker/mixed European wheat is up about 1 percent, equities are softer with the DOW off 40 points, and crude is off about 60 cents a barrel.

Outside markets with fund liquidation/risk coming off the table versus friendly fundamentals appears to be the story this a.m.  A battle that has been going on for weeks and continues to lead the headlines; weather is supportive to our markets as it simply remains either too dry or too wet in many places.

Winter Wheat conditions dropped yesterday which was a little bit of a surprise, while spring wheat came in at only 36% planted which is near record slow, corn planting was 63%, and beans at 22%. 

It is about 10:40 now and markets are open with the grains holding in there tremendously well despite the rather weak outside markets.  Presently we have the equities under pressure with the DOW down 165 points, the US Dollar is firmer with the cash index up 350 at 75.82, crude is off 2.00 a barrel, while the grains have CBOT wheat up 9 cents, KC wheat up 2, MPLS wheat up 5, beans off a dime, corn up 2 cents on the old crop, and new crop corn up about a nickel.

So far I consider the grain price action great; wheat in particular having gained on the overnight session despite the outsides.  One caution would be that wheat is being lead by CBOT wheat which could be due to the quality concerns starting to hit the SRW wheat area (scab and disease with all of the rain) but it CBOT wheat leading the way for wheat’s strength today could be more risk coming off the table as the funds on Friday where short CBOT wheat and long the other wheat’s.

When everything was said and done the grains all ended up showing some strength and closed very firm across the board; wheat lead the way with CBOT wheat up 28, KC wheat was up 19, and MPLS wheat was up 26, Corn was up 23 on old crop, while NC corn was up 18, beans where up 14, crude bounced back towards unchanged and at 5:30 is up about a dollar in the night session, the US dollar is down 101 points at 75.369 on the cash index, and the equity markets bounce well off of their lows with the DOW closing down 69 points.

Overall a great day; especially considering where the outside markets where for most of the grain market session; many thought we could see the grains close in the red; but we did manage good solid strength as most of our grains close near the highs when all was said and done.

Basis strong, spreads supportive, weather supportive (dry in Europe, dry in the south, Wet in Ohio, ND, Indiana, SRW Areas), and outside markets bouncing all helped the grains today in very impressive action.  Technically it appears we are still in sideway’s markets; but a decent bounce could turn some signals into buy’s in the near future.

Birdseed buyers seem to have more interest the past couple of days as it appears that business has picked up; I would note that business on the books via increased shipments is the main attraction but I have also had some buyers inquire about purchasing product that really seems to be in tight hands.

Watch for more volatile price action as we move forward; there has been rumors lately that Russia and the Black Sea region will be back in the export game rather soon.  That in itself wouldn’t be the most friendly thing for our grain markets.

Also don’t forget tomorrow we will have another session of our MWC Marketing Hour Round Table; in Onida Wednesday at 3:30.  We will be updating charts, going threw strategies and then do some more mock trades.  We hope to see you then.


Monday, May 16, 2011

Grain Markets Opening Comments 5-16-11 stronger markets ...China buying corn again or another commodity sell off waiting to happen?

Markets are called mixed to higher this a.m. from a firmer overnight session and mixed outside markets.

In the overnight session CBOT wheat was up 10, MPLS wheat was up 12, KC wheat was up 8, beans where up 3-4 cents, old crop corn was up 11, and new crop corn was up 6.  At 9:15 outside markets have crude down 80 cents a barrel, European wheat up 1-1 ½ percent, the US dollar is weaker down 333 at 75.424 on the US Dollar cash index, and equities are softer with the DOW down 25 points.  Crude, the US dollar, and equities are more supportive to the grains now then they where when the grain paused their session at 7:15.

China’s rumors of buying old and new crop corn, weather, and a technical bounce in oversold markets are the main reasons being talked about this a.m. for last night’s bounce and a possible continuation of a bounce this a.m.  On the weather front quality concerns for the SRW crop has popped it’s head and cold weather hasn’t allowed for the corn crop to progress much.  This afternoon we will have a planting progress and crop conditions report out.  Estimates are all over the board for corn planting progress as I have seen the from 55% to 70% planted.

We will have export shipments out this a.m. at 10:00 and those may be watched a little more then normal due to the fact that last week the USDA cut exports for corn and beans.  If we can see shipments pick up over the next several weeks then there is a chance that the bulls are correct in regards to last week’s reasoning behind the cut in exports.  That it was simply logistics due to flooding and that the sales/shipments should pick back up once logistics allow.  Lower prices seem to have helped the demand picture in general and it has been heavily noted that corn basis is firmer.

Please give us a call if there is anything we can do for you.

Wednesday, May 11, 2011

USDA CROP REPORT- Balance Sheet Update- MWC Marketing Hour Round Table - Mock Trades

Below are the mock trades placed this week at during our weekly MWC Marketing Hour Round Table; which was held today Wed at 3:30 (this and every week at that time).

During this session we listened to Country Hedgings update on the USDA Report (it can be found at http://www.countryhedging.com/ )

We then went threw some other info on today's report, then went on to our charts and technical analysis of the recent price action, and finally we followed up last weeks trades and added a new trade this week.  One thing that has been noted is that perhaps more follow up or changes would have been done to the trades if we had been updating on a daily basis; such as moving stops up on profitable trades; whereas the way it was done we actually seen profitable trades turn into losers a couple of times.  But that is part of what we are trying to do; learn some of the good things and bad things from various methods of trading/hedging/grain marketing.

This week you see we have some more unique trades and a couple of them are multi leg and honestly hard to evaluate because they entail more then 1 option.  There are also a couple of simple buy at X, risk to X, with an objective of X, and then a trade that is like a risk and reverse trade.

See below for the trades and results of previous trades.  Kevin did have a good one that earned him the nickname Kevin the Great as he had one MPLS trade that returned him 63 cents profit, and Dan the Man has managed to lock in a couple of winning trades, while myself and Jordan struggled on a couple of trades thus focused on some option trades.

Below the trades you will see some info on the USDA Report; the charts are skewed as they show year over year and then month by month. 

US Carryout Numbers World Carryout Numbers
 CornBeansWheat  CornBeansWheat
’001.8990.876 ’00617.5
’011.5740.687 ’
’021.0870.1780.491 ’
’030.9580.1120.547 ’
’042.1130.2560.54 ’
’051.9670.4490.571 ’
’061.3040.5740.456 ’
’071.6240.2050.306 ’
’081.6730.1380.657 ’
’091.7080.1510.976 ’
10-May1.8180.3650.997 10-May6.0712.4287.279
10-Jun1.5730.360.991 10-Jun5.82.4617.126
10-Jul1.3730.361.093 10-Jul5.5542.496.872
10-Aug1.3120.360.952 10-Aug5.482.3786.421
10-Sep1.1160.350.902 10-Sep5.3372.3376.534
10-Oct0.9020.2650.853 10-Oct5.2112.2576.418
10-Nov0.8270.1850.848 10-Nov5.0852.2566.339
10-Dec0.8320.1650.858 10-Dec5.1182.2096.493
11-Jan0.7450.140.818 11-Jan52.1416.54
11-Feb0.6750.140.818 11-Feb4.8232.1386.531
11-Mar0.6750.140.843 11-Mar4.8482.1436.684
April0.6750.140.839 April4.822.2396.717
May0.6750.140.839 May4.82.36.7
20120.90.160.702 20125.0842.36.66