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Options play: Big upcoming week for corn, beans?
With another USDA report around the corner could the impact on grains prices be as big as some anticipate?
Fundamentally, on Tuesday we have a quarterly grain stocks report that could have a huge impact on prices. Specifically, it’s called National Agricultural Statistics Service(NASS) report from the USDA and it will let us know where the USDA thinks we stand on supplies of grains. The description of the report acordding to the USDA is “a full-text report, issued four times yearly, contains stocks of all wheat, durum wheat, corn, sorghum, oats, barley, soybeans, flaxseed, canola, rapeseed, rye, sunflower, safflower, mustard seed, by States and U.S. and by position (on-farm or off-farm storage); includes number and capacity of off-farm storage facilities and capacity of on-farm storage facilities. Continues Stocks of Grains. In addition, that same NASS/USDA will also have a report called the Prospective Planting report. The description of this report is “This ASCII text file reports the expected plantings as of March 1 for corn, all wheat, winter wheat, durum wheat, other spring wheat, oats, barley, flaxseed, cotton, rice by length of grain classes, all sorghum, sweet potatoes, dry edible beans, soybeans, sunflower, peanuts, and sugarbeets; acreage for harvest of oats, hay, and tobacco”.
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These two reports will probably be more bearish than what analyst are thinking in my view for corn and beans. According to Hightower on the corn, “The IGC estimated that world corn production would come in at 941 million tonnes in 2015, down 49 million tonnes from last year, mostly due to lower yields…..Analysts see March 1st stocks at 7.609 billion bushels (range 7.459-7.800) from 7.008 billion last year”.
In terms of soybeans Hightower reports, “Analysts see March 1st stocks at 1.346 billion bushels (range of 1.250-1.413 billion) which would be up from 994 million last year. Planted acreage is estimated at 85.92 million with a range of 83.1-88.0 million and against 83.701 million in 2014. If 88 million acres are planted, ending stocks should come in around a record high of 664 million bushels”. Again I believe we will see an even more bearish report than what is expected by the a fore mentioned predictions.
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Technically, I have added my favorite technical indicators to this charts below. They are the 9 (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 these daily charts each bar represents one day of trading). These few technical indicators can tell me many, many important 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.
On the soybean chart below, I have the market in what I refer to has a downward trend. This is simply because the market is trading below the 20 day SMA (green line) and using the indicator as resistance. Also 3 out of 5 of my indicators are pointing lower on fairly sharp angles. The top line of the Bollinger Bands, the 20 day SMA, and the 50 day SMA (blue line) are all bearish.
I think this downward trend could continue in the coming days and weeks and could possibly even become a term I have coined called a “PRINCIPAL-TREND” down. This would be the strongest possible trend. However, in order for that to take place I would need the 9 day SMA on this chart point down instead of sideways and the market would have to then move lower below the 9 day SMA and use it has resistance instead of the 20 day SMA it’s using now for resistance. This may occur on the heels of these reports this week.
I figured this out by going back and forth from a daily to a weekly chart 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 80-85% 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 15 years. So if I’m using it then maybe my readers should check it out. Yes?
May daily soybean chart
Technically, on the chart below my indicators are showing a classic sideways, consolidation trend. The market is trading in a range between roughly $4/bushel and $3.75/bushel. This I have determine quite simply by looking at the top and lines of the Bollinger Bands. The top line being the upper end of the range and the bottom line the lower end. On the heels of these upcoming reports this market could very well break out of the range and head lower.
May daily corn chart
For exact details on strategies, months, expiration dates, strike prices, and number of positions feel free to contact me at 312-277-0115 or firstname.lastname@example.org .
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. There could be upcoming trends in the grains, energies, indices, financials, precious metals, softs and more.
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