Information about grain markets and info to help producers to market crops. See how various grain marketing strategies can effect ones average price. We will be posting various potential trade and option strategies along with marketing decisions made on our mock farms.
Monday, May 21, 2012
Ag West - CORE Plan Weekly Alert
Below is forward I received from Steven Knuth owner of AgWest Commodities; he said i could post this on the blog. I guess he seen some posting that i do once in a while at http://www.talk.newagtalk.com
He welcomed his information to be put out to help inform producers; make sure to check them out at www.goagwest.com
Below is the forward.
Past performance is not indicative of future
results. There is substantial risk involved in trading futures and
options which may not be suitable for everyone. However, the risk
involved with purchasing options is limited to the premium paid plus
May 18th, 2012*
DEC. 2012 CORN $5.37
NOV. 2012 BEANS $12.88
JULY 2012 KC WHEAT $7.05
Weekly Change (2012 New Crop) Corn was up 32
cents, Beans 33 cents lower and Wheat finished the week up 95 cents.
The Unlikely Leader
Both the U.S. and World wheat
inventories are huge but that didn’t stop the wheat market from becoming the
upside leader for the week. Hot and dry conditions are prompting concern
of yields being trimmed in winter wheat country and earlier this week, Strategies
Grain lowered its European Union wheat production estimate for 2012/13 by 4.2
mmt. Traditional funds have been camped on a very large short position in
wheat for a very long time and recent weather developments have been enough of
a catalyst to bank some profits.
Wheat fundamentals are more
negative than for either the corn or beans, which makes wheat an unlikely
leader to higher values. That said, this has similarities to the
beginning of the 2010 bull market when weather prompted massive fund
short-covering in the wheat. Short-covering alone will not create
a raging bull but it has so far been enough to technically turn the trend
higher after a prolonged, year-long downtrend. HAVE YOUR NEXT SALES
TARGET PLACED AND ROLL ORDERS CONFIRMED WITH YOUR BROKER.
July KC Wheat
For the meantime, the wheat
and corn markets are connected at the hip as some substitution of wheat in feed
rations is being assumed to ease pressure on the short supply of old crop
corn. If corn doesn’t follow along, wheat will quickly price itself out
of the market as a feed substitute. December corn posted a low of $4.99
last Friday but this week’s rally has it poised to challenge overhead
resistance at the multi-month downtrend line. A continued wheat rally could provide the necessary
momentum for a much needed trend reversal in corn. Cheer those wheat
Have ALL Your Beans Hedged?
Beans are in quite the
opposite position of wheat. The fundamentals are bullish but the
technical view has turned decidedly bearish and the funds are VERY LONG of
beans. In the face of an explosive wheat market and a decent rally in
corn this week, the bean market struggled to hold steady. Current prices
provide strong profitability in 2012 . . . if
you haven’t done so already, GET YOUR BEANS HEDGED!
Is Your Friend
Growing season volatility is
increasing and that is a very good thing. When you’re marketing under a
structured plan that can take advantage of extended moves in either direction, the
more volatility the better! Higher prices are always the most
desirable but no matter which direction markets are moving, you have the luxury
under this plan to hope the move has legs. The key to the success of your
plan is to be prepared for whatever the market does next. Do
yourself and your broker a huge favor by having ALL appropriate roll orders in
at all times.
REMINDER: At our winter
Outlook meeting we showed a hypothetical range for 2012 corn prices (futures).
The high was $8.50 and the low was at $3.00. Here we
are in the middle of May and EITHER end of that range is easily argued and
certainly possible. How does one market when there is a potential $5.00
range in price? You cover your downside risk and hope for higher values
to sell into . . . you do it exactly the way you are and most importantly,
“just keep doing the next right things”!
DIRECTIVES:Sell next 10% @ $5.58 Dec. 2012 futures.
If not already covered with Puts on unsold production, talk with your
2012 550 Puts on 65% of anticipated production.
2012 CASH SALES TO DATE:Total
of 35% forward contracted: (04/20/11 Sold 10%
@ $6.00 Dec. 2012 futures) (06/08/11 Sold 10% @ $6.24 Dec. 2012 futures)
(07/13/11 Sold 10% @ $6.42 Dec. 2012 futures)(10/27/11
Sold 5% @ $6.13 Dec. 2012 futures)
next 10% @ $14.20 Nov. 2012 futures
not already covered with Puts on unsold production, talk with your
OPTION POSITION: Nov
2012 1240 Puts on 70% of anticipated production.
CASH SALES TO DATE:Total of 30% forward contracted:(09/12/11
Sold 10% @ $14.00 Nov. 2012 futures) (02/03/12 Sold 10% @ $12.36 Nov. 2012
futures) (3/30/2012 Sold 10% @ $13.69 Nov. 2012 futures)
Sold next 10% @ $6.79 July futures.
DIRECTIVES: Sell next 10% @ $7.56 July 2012 futures
If not already covered with Puts on
unsold production, talk with your broker immediately!
640 Puts on bushels not covered through insurance revenue products.
CASH SALES TO DATE:Total of 60% forward contracted: (03-31-11 Sold 10% @
$9.00 July 12 Futures) (07-19-11 Sold 10% @ $8.36 July 12 Futures)
(08-25-11 Sold 10% @ $8.79 July 12 Futures) (12-30-11 Sold 10% @
$7.26 July 12 Futures) (01-26-12 Sold 10% @ $7.26 July 12 Futures)
(05-18-12 Sold 10% @ $6.79 July 12 Futures)
Directive: If not already booked,
purchase 2012 summer/fall usage, for those with current call hedges, call Katie
Directive: Place orders to buy $4.00 Calls @ 50 cents per
mmbtu on all 2013 and 2014 usage. These can be filled now!
Directive: If not already hedged,
buy Aug.-Nov. 295 Calls @ 25 cents/gallon