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ShelladyOptions
Senior Contributor

OptionEye Feb 27th

Good morning.

 

Looks as though we will start on the sell side today. While the short and long term trends for wheat, corn and beans are still higher, a close below 639.5 in May corn could reverse the short term and a close below 630.25 would be a long term negative indicator.

 

May beans need a close below 1272.75 for a short term trend reversal and below 1201.25 to reverse the long term trend.

 

Funds long 199,000 corn, short 55,000 wheat and long 110,000 beans.

 

Equities are lower, oil is $1.10 lower and the Euro has weakened as well.

 

Scott

 

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5 Replies
p-oed Farmer
Senior Contributor

Re: OptionEye Feb 27th

Scott...... When you add the options the funds are almost short 100,000 chi wheat.......

IMO....... It is going to be dynamic when they have to unwind that bad boy........ p-oed

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ShelladyOptions
Senior Contributor

Re: OptionEye Feb 27th

I totally agree and that has got the wheat trade spooked. It has not been an easy ride.

 

Here are a few more things to peak your interest thanks to the LinnGroup at http://www.linngroup.com

 

 

News -

The USDA released it Cattle on Feed report Friday afternoon showing:

On Feed 102% vs. the average estimate of 102.5% Placements 98% vs. the average estimate of

98.8% - The report was called neutral to a shade friendly…

Corn is now trading equal to delivery value in Zone 1 compared to 26 cents below delivery

value a year ago on this date. Zone 4 is 6 ½ cents above vs. 16 cents below last year.

Cash values show the Decatur Corn basis 26 cents above a year ago, STL. 15 cents above,

Chicago 29 cents, CN rail 19 cents above and PNW trains 45 cents.

Spreads also reflecting the tight cash market with CH/CK trading 7 cents above year ago

values.

Exports continue at a good pace with last week’s sales taking us to having sold 70% of the

total USDA estimate vs. the 5 year average for this date of 65%.

The above numbers argue that cash Corn is in a Bull market while futures continue to be

trapped in the trading range of the last 6 months of 575 to 675.

Implieds and

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ShelladyOptions
Senior Contributor

Re: OptionEye Feb 27th

Futures have been a bit mixed on the day as we started the day lower in the grains off speculation that growers will increase production by an estimated 15%.  Futures have however climb out of the cellar and are now slightly higher.  Beans leading the way followed by wheat and corn respectively. 

 

The flip in the market is being attributed to crop output in Brazil mainly in the soybeans.  The lack of production from the south has brought speculation that the US will have to increase exports to cover a declining Brazilian crop.  Similar crop levels out of Brazil will continue to provide support in the markets and I think that is why we are seeing this turn around in the markets this morning.

 

Scott

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roarintiger1
Honored Advisor

Re: OptionEye Feb 27th

The US exporting bushels of beans that Brazil usually exported.

The US exporting gallons of ethanol to Brazil.  

Sugar production, corn and soybean production getting lowered with every new report coming from SA.

Soybean prices in the US gaining ground on corn prices.

According to the "experts",  majority of the corn inventory is in the farmer's hands.

Gasoline usage in the US is going down.....but gas prices are going up.

Traders are shorting the wheat market.

Record corn plantings predicted in the US,  despite seed corn shortage.

 

Something has to give.

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roarintiger1
Honored Advisor

Re: OptionEye Feb 27th

I should add that a report out of Brazil today lowered their expected production by roughly 147 million bushels from what the USDA last reported for there.    Will the US make up that difference in exports? That would significantly lower the US carryover number.

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