Trade Update

Another trade update for Jeremey.

Monday morning with outside markets under pressure; my corn scale trade has allowed me some profits. This market still feels like a sideway's market so I am going to get out at 6.38 1/2; and replace orders to re-sell the Dec corn.  It books me a profit of 4,275; part of me thinks I should reverse and go long but i think i will stick with the original trade.

Trade update for Jeremey

With corn under pressure this morning I am going to add a stop to ensure that I can lock in a profit on the open corn scale selling trade that I have on.  I presently have 12 short Dec corn; that i started selling at 6.43, I then sold 1 at 6.47, 2 at 6.50, 3 at 6.55, and 5 at 6.60.

I am going to place a stop in at 6.40  1/2 ; while orders back to re-enter original trade if I get stopped out.

Basically this market has traded sideways for some time; so my thoughts are perhaps there is a decent chance it continues until new news finally moves it one direction or another.  So in the mean time try to take what the market is giving us.

Here are a couple charts to help show my thoughts.

Grain Market Comments Closing 10-24-11 Another poor corn close?

Markets closed mixed to firmer today.

Corn was up 2, beans where up 14-15, KC wheat was up 12, MPLS wheat was down 1, CBOT wheat was up 10-11 cents, crude was up nearly 4.00 a barrel, equities where firmer with the DOW up 105, and the US dollar is presently weaker 200 at 76.198.

Technically today’s performance by corn wasn’t the best as we appear to keep breaking out but yet closed well off of our highs once again.  Harvest pressure showing up someplace?

The main headline continue to be a lack of producer selling; with spreads tightening and basis firming as noted in our bids today.  I believe we firmed up nearly all of the corn, wheat, and soybean slots and this hasn’t been the first time in the past couple of weeks that this has happened.  We are quickly nearing levels where one might want to consider locking in the basis (especially for those of you with good HTA contracts out there) or at least having basis offers out there.

 Buyers are hunger in the sense that they simply haven’t got the supply that they are used to; plus going into this fall harvest pipelines where not exactly full.  Add to that the fact that most producer operations have more storage then ever, less need to sell then ever, and borderline as bullish as anytime in the past and we have very solid basis appreciation that has been happening the past couple of weeks.  When it ends who knows, in marketing 101 what is suppose to happen is basis is suppose to appreciate, then board spreads are suppose to firm, followed by a rally in the board to help pry loose the grain from the producers.  Also in theory basis and the futures offset each other in cash movement.  Which is why if one feels strongly that the board has plenty of upside room doing a basis contract or having a basis offer out might make perfect sense.  In the basis/cash/futures theory when the board goes up basis goes down; when the board goes down basis goes up.  The past couple months or so we have seen it happen where the stronger basis has helped out the weaker board; and now we appear to be in consolidation mode on the board.

If the breakout from this consolidation is to the upside then we do open the risk to basis coming under pressure in the future.   Whether basis stays strong or see’s some weakness on a rally in the board will probably demand on what causes the rally and how strong our demand actually is.  My opinion is that our demand is more of a lack of supply because of bullish producers versus super strong competitive demand. 

If you would like more information on basis contracts and how they work please feel free to give us a call.

The one market that hasn’t followed suit yet in strong cash markets has been the birdseed market.  Lack of demand or maybe it’s time is yet to come?  One thing that will hang over the sunflower market for sometime will be the big world crop.  Perhaps that is why the birdseed market is still a $5.00 or so premium to the crush market.  The huge world supplies of all of these grains along with fund money flow remain one concern when looking at the downside risk.  Add to that the fact that it feels like producers simply are not selling enough and I think we have created markets that have plenty of downside risk even though today things feel good or look good.

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

Thanks

Mock Trading and Option Assignments

This past week Wed we had another session of MWC Marketing Hour Round Table in which we placed some mock trades after looking threw some charts and talking about this week's price action and what was behind it.

No adjustment trades where made; but the following trades where placed.

Dan the man bought KC March wheat at 7.20 with rather aggressive objective of 8.90 while risking to 6.90.  Awesome risk reward ratio if he can let a winner ride that long.

Jordan bought some volatility as he went long the 6.40 Dec corn call as well as the 6.40 dec corn put; spending about 55 cents total.

My self (Jeremey) placed an aggressive ratio calendar type play in beans.  I bought 9 of the 13 jan bean calls, sold 10 of the 13.50 calls, sold 1 of the Nov 2012 bean puts, and purchased 1 of the 11.70 Jan bean puts.  Bottom line a bullish bean trade.

We did book some losses this week as some of the Nov options expired and with that we took some futures.  Jordan is now long 1 Nov bean at a net of 13.70 and 1 at a net of 13.00

I decided to offset my what would have been long Nov bean contract and exited my three leg trade booking a loss.

Since our new fiscal year started we now have overall winners totaling about $49k with losers totaling about $12k.

Net open positions total are down about 2k; most of which is Jordan's bean longs down about 11k.

We hope to see you next week at our meeting!

Opening Grain Market Comments 10-19-11

Markets are called mixed this a.m. behind a choppy mixed overnight session and outside markets that are on the quite side of things.

In the overnight session corn was up 2 cents, beans where unchanged to off a penny, KC wheat was up 4-5 cents, MPLS wheat was firmer by about a nickel, and CBOT wheat was up 5 cents.  At 9:20 outside markets have the US Dollar weaker down about 290 at 76.848 on the cash index, European wheat is up a little over a ½ of a percent, equities are near unchanged also with the DOW up about 30 points, while the S & P is near unchanged, and crude oil is up about 30 cents a barrel.

Overall another day with out a lot of fresh news to effect our markets.  The biggest thing remains the overwhelming world supplies of some of our grains versus tight domestic stocks, and a lack of producer selling at a time when seasonally it is at it’s highest.  Basis continues to firm on the row crops in many areas and spreads have tightened up on the row crops as producers are able to store more then the market thought.  Longer term my personal opinion is we are going to run the risk of having too much supply sitting on top of the market; but only time will tell as demand overall for grains is good and even though eventually producers have to sell or move product; end users eventually also have to buy product.  So it really appears to be coming down to a game and right now producers are more in control then normal.

Don’t forget that we do have our MWC Marketing Hour Round Table this afternoon in Onida at 3:30.

Watch outside markets for direction and see if we ever see some selling pressure from this year’s row crop as we go forward.

Thanks

new Trade for Jerermey

After getting stopped out of my scale wheat trade last week; I decided to try another scale type trade.  This time on corn; as my chart I posted on Friday I thought looked like a selling opportunity.  Plus I think that this year's harvest still hasn't seen the producer selling that I think happens at the tail end of harvest.

My new trade is off of Dec corn; it is also a scale trade.

Sell 1 at 6.43

Sell 1 at 6.47

Sell 2 at 6.50

Sell 3 at 6.55

Sell 5 at 6.60

Sell 8 at 6.70

Risk to 7.00

Objective of 5.85; with plans of moving stop up if I can lock in a winner or adding option leg to protect profits.

To add a little complexity I am also selling 2 of the 6.00 puts for 12 cents a piece.

Which turn into covered puts if I get my first couple of orders filled.

Dec corn Chart

Here is a quick look at a Dec corn chart.

market comments 10-14-11

Markets are called firmer this a.m. behind a firmer overnight session and supportive outside markets.

In the overnight session corn was up 4 cents, beans where 7 higher, KC wheat was up 7, MPLS wheat was up a nickel, and CBOT wheat was up 8 cents.

At 9:20 outside markets have European wheat up about 2 %, crude is up a little over 2.00 a barrel, and US dollar continues it’s weakness with the cash index down 445 at 76.550, and equities have a little bounce going with the DOW up 108 points.

This morning we did have export sales out and they where good for corn while in line with expectations for wheat and beans.  Corn came in at almost 50 million bushels for the second week in a row nearly 2 times what we need on a per week basis to meet current USDA expectations.  Beans also came in above what is needed on a per week basis to meet current projections but only inline with trade estimates and they continue to lag last years sales seen at this time; they came in at 24.7 million bushels.  Wheat came in at 17.8 million bushels.

Keep in mind that the latest USDA report is showing decreases rather heavy year over year for exports for the three grains.

Not a lot of other news out there; harvest continues to happen at a good pace but producers continue to be storing not selling so most of the grains are seeing basis firming up.   With harvest being bigger then expected for some look for basis to be rather volatile as we go forward.  If places get full it might not matter that producers really don’t want to sell; we could see basis under a little pressure in some areas for fall harvest.  Overall the recent news out there with China buying some corn should be long term friendly to basis; but we really need the trend of demand better then expected to continue.

I think that is one risk we have out there is the fact that many producers are not selling and that could create even more selling pressure later thus preventing rallies taking us as high as some feel and think they could.

The birdseed market is one market that really has showed little signs of demand and that market appears to be slower then slower.  No one seems to need or want anything.  The crush bid isn’t even close to where the birdseed bid is on sunflowers and that market to me feels much different then the bull market it has seen the past year.

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

Midwest Marketing Hour trade updates 10-12-11

Jeremey- added orders to buy kwz1 at 7.06, 7.01 and a stop at 6.95 with an objective of 7.35
- also added 1 short WN2  6.00p Put and 2 short WN2 9.00 Calls
Jordan- added orders to buy WZ1 at 6.25,6.20, 6.15, 6.10, 6.05, 6.00 stop at 5.85 on all
- also added 1 short CZ1 6.00 Call and 2 Long CZ1 670 Calls
Kevin- added spread of long KWH2 and short MWH2 at 1.1875
- also added orders to buy SF2 (Jan Soybeans)  at 12.49, 12.40 and 11.90 doubling the quantity each time.
Producer C -added 1 Short MWH2 10.00 Call and 1 Short MWH2 8.00 Put

Exiting Some Trades Ahead of USDA Report

With our new mock trading rules that allow us to simply have to post trades or exits to this blog I have decided to square up some positions that I have open ahead of the USDA Report.

To offset some trades I am doing the following at about 11 central time on Tuesday

Selling 1 Nov bean at 12.23; locking in a profit on my long beans of $2,963

Selling 2 Dec corn and buying a 7.00 put and 6.00 put to offset an old corn trade while selling 2 of the 6.80 calls.  The net of all of this is locking in a $9,969 profit.


The last trade that I am booking profits on is long 3 of the 12.50 Nov Calls against 1 short 13.00 call;  I am exiting this for about about $1000 profit

As a reminder our MWC Marketing Hour Round Table happens each Wed in Onida at 3:30; we hope to see some of you there as we will discuss the USDA report as well as updating more mock trades.

Mock Trade Update Jordan

Booked $106 profit on short 9.00 chic wheat call and $609 on 6.25 long put of chicago wheat letting short put ride. for time being.

booking profit on long long futures positions in wz1 for total profit of $9,100

Booking profit on 2 short 14.00 bean calls of $2,938

Opening Grain Market Comments Monday - 10-10-2011

The grain markets are called firmer this a.m. behind very supportive outside markets.

In the overnight session we seen corn up a dime or so, beans about 26-27 cents, KC wheat was up 13-14 cents, MPLS wheat was up 10-13 cents, and CBOT wheat was up 13 cents.  At 9:00 outside markets have equities firm with the DOW up 230 points, crude oil is up 2.50 a barrel, the US dollar is getting smacked with the Cash index down 1.195 at 77.530, and European Wheat is about 1 % firmer.

The big thing in the markets appears to be the outside markets that are showing lots of strength this a.m.  Fundamentally it appears that much of HRW area got a good shot of rain and I have heard comments of the drought being broke.  The other big thing will be a USDA report which is out on Wed which should lead to some position squaring as we head into it.

Last year the USDA mentioned how the reason for the high Sept 1 stocks was due to new crop being harvested; will that be the reason this year again?  If it is will it give the bulls what they need to give our prices some life?  If not how much downside risk is there if the report comes out even more bearish then the estimates?  What about the fact that many producers have stopped selling; is there that much more that needs to be priced in the near future?

Estimates for this week’s report for yields are 148.7 on corn and 42 on beans; versus 148.1 on the Sept USDA report for corn and 41.8 for beans.  Carryout estimates are 804 million bushels for corn versus 672 last month, beans are pegged at 186 million bushels versus 165 last month, and wheat is estimated at 753 million bushels versus 761 in Sept.

With the recent drop in board basis has slowly been improving for most of the grains; but the improvement hasn’t been one that I would call a demand driven improvement; more supply cut.  That is something to keep in mind as we go forward.  If supply starts to increase we really need to have demand step up or ECON 101 says increased supply over demand gives us lower prices. 

The risk in the outside markets is still out there but most are starting to feel that liquidation is close to it’s end for the grains.  Only time will tell.

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

Mock Trades 10-5-11

Below are screen shots showing all of the open trades from our MWC Marketing Hour Round Table - MOCK Trading Session.

Please let us know if you have any questions.

Mock Trade - Bullish Trade

I decided to add a bullish trade today to help offset some present positions and simply show a trade that should be limited cost (if held short term) yet provide rather good returns if the markets pops up like some producers feel should happen.  After all the corn market is now a market that most buyers or end users are showing good returns so to make a bullish bet with decent returns and light risk (if managed correctly).

So the play I used which I am putting in our mock trading which as mentioned yesterday is now opened up with the only rule being trades need to be posted here at www.grainmarketingplans.blogspot.com

Sell 1 Dec 6.20 corn call and purchase 2 of the Dec 6.50 corn calls; net cost of about 7 cents; which is my risk in a down market.  Upside risk if held is at 6.50 which would be the 30 cent spread as well as the cost or 37 cents total.  The neat thing about this trade is if market moves up in a hurry and time value hasn't ate away it can be a good winner at the 6.50 level.

Here are a couple of graphs; red line represents today; green line when option expires.  In the second chart the red line is in 15 days after a 50 cent rally.

Note the ranges are different in each of the P L Graphs.

As for an exit strategy I plan on re-evaluating on Oct 19th; during our MWC Marketing Hour Round Table; assuming i will need to watch and manage closely if the markets are up while let the trade sit if the markets are down.

Mock Trading Update!

Here is a quick recap of last week's mock trades from our MWC Marketing Hour Round Table.  Which we have every week in Onida on Wed at 3:30; hope to see some of you there.

New Trades

Jordan 

Sold a 6.00 March Wheat Put and a 9.00 March CBOT Wheat call; used that to purchase a Dec 6.25 Wheat Put.

Jeremey

Purchased 3 of the 13 Nov bean calls; while selling 1 of the 12.20 NOv bean puts and purchasing 2 of the 11.00 Nov bean puts; net cost about a nickel a bushel.

Adjustments

Jeremey Sold 1 6.00 Dec put and purchased 2 of the 6.80 Dec corn calls

Jordan moved stop on his oats-corn spread.

Here is the updated P L on booked trades; both Dan and Kevin where gone last week and didn't enter any new trades;

PERSON          DATE  PROFIT/(LOSS) Booked

Dan        14-Sep  $            2,037.50   

Dan        14-Sep    $            (750.00) 

Kevin     14-Sep  $              500.00 

Kevin      21-Sep    $         (1,000.00) 

Dan        21-Sep    $            (200.00) 

Jeremey  28-Sep  $            2,900.00   

Jeremey 28-Sep  $            1,500.00      

Jeremey 28-Sep  $            1,000.00   

Dan 28-Sep    $         (1,000.00) 

Jeremey 28-Sep  $              850.00   

 Kevin 28-Sep  $            7,925.00       

Also our old rules stated that adjustments could only be made once a week;  We have changed that and will now allow adjustments anytime provided they are posted here at www.grainmarketingplans.blogspot.com

So hopefully that will liven up our action.  If anyone who can't attend would like to enter a mock trade feel free to drop one of us an email or simply post the trade as a comment.

To start off I will add and adjustment to an open trade; I will place a buy stop on a close of 4 contracts of Dec corn - on a close above 6.05 1/2 ; this is to reverse out of present position that was a couple long Oct 7.00 puts that has now turned into short Oct futures from 6.94 (strike price minus option cost)

A couple of Dec corn charts - What do they tell you?

Here are a couple of Dec corn charts..........do they say bear market?  Or maybe the bulls will say that it is just another bear trap that our volatile grain markets like to give us.