Grain Marketing. Swenson Investments & Commodities

Transcription

1 Trading futures and options involves substantial risk of loss and is not suitable for all investors or producers. Grain Marketing Swenson Investments & Commodities 608 N West Ave Sioux Falls, SD th St SW Watertown, SD By Andrew Wieting Partner / Commodity Broker & Mike Sonne Grain & Cattle Marketer

2 Trading futures and options involves substantial risk of loss and is not suitable for all investors or producers. Major Marketing Components Seasonality Fund Positioning Fundamentals Technicals

3 Soybean Seasonality Chart provided by MRCI PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS Trading futures and options involves substantial risk of loss and is not suitable for all investors or producers.

4 Soybean Seasonality (Cont.) What differentiates the beans from the corn is that the two major producers are in different hemispheres and therefore produce in different periods of the year. They are harvested mostly in November and December in the US, while Brazil s harvest takes place mostly from May until June. As one can see the highest prices are achieved in the May to July timeframe just prior to Brazil s production hitting the world supply. (Seeking Alpha) Soybean sales are best made from April to the middle of July (from a historical perspective). Beans typically give you an extra month to get sales in place as it takes the market a month longer to be confident in the production estimate.

5 Soybean Fund Positioning PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

6 Soybean Fund Positioning (Cont.) Historically speaking funds are getting close to their maximin length when they are net long 105k-200k contracts rallies potentially nearing top at these periods. On the flip side of the coin funds are often as light or short the corn market when they are net short 50k-120k contracts downtrends potentially nearing lows during these periods.

7 Soybean Fundamentals Carryover (US & World) Currently the world has a good amount of beans but the worlds appetite (China being the leader) is very high and any interruption in world production leads to good rallies typically Feb. US Carryout March Est. Trade Avg. Trade Range Feb. USDA Soybeans World Carryout March Est. Trade Avg. Trade Range Feb. USDA Soybeans Feb USDA Feb..302 USDA Feb USDA Feb USDA

8 Soybean Fundamentals (Cont.) Production (Expected & Actual) Currently South Americas bean production numbers are the ones being watched. Brazil looks good (150 MMT) and Argentina is having a bad drought (50 MMT) South American Production March Est. Trade Avg. Trade Range Feb. USDA Argentina Soybeans Brazil Soybeans Feb USDA Feb. USDA Feb. USDA

9 Soybean Technicals PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

10 Soybean Technicals (Cont.) Up trending or down trending market - currently up trending (Just took out contract lifetime highs) Top third or bottom third of the last 12 months We are currently at the annual highs so sales (hedging strategies) with upside potential doesn t seem necessary. Technical Indicators Currently most are very positive which is a good sign

11 Corn Seasonality Chart provided by MRCI PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS Trading futures and options involves substantial risk of loss and is not suitable for all investors or producers.

12 Corn Seasonality (Cont.) The worlds two largest corn producing nations the US and China harvest the majority of the world s corn supply over approximately 12 weeks from the middle of September to the middle of December. One shouldn t be surprised then when the seasonal low is most often put in during that period of time. (Seeking Alpha) Corn sales are best made from the middle of March to the middle of June (on a historical basis). Making incremental sales over this period of time proves to be the best strategy over time (in our experience).

13 Corn Fund Positioning PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

14 Corn Fund Positioning (Cont.) Historically speaking funds are getting close to their maximin length when they are net long 230k-260k contracts rallies potentially nearing top at these periods. On the flip side of the coin funds are often as light or short the corn market when they are net short 215k-260k contracts downtrends potentially nearing lows during these periods.

15 Corn Fundamentals Carryover (US & World) The amount of corn production left over after exports/imports, feed usage, and ethanol. US Carryout March Est. Trade Avg. Trade Range Feb. USDA Corn World Carryout March Est. Trade Avg. Trade Range Feb. USDA Corn Feb USDA Feb USDA Feb USDA Feb USDA

16 Corn Fundamentals (Cont.) Production (Expected & Actual) Before the year the USDA and South Americas versions of the USDA put out production estimates. Weather over the course of the year causes adjustments in production estimates which creates selling opportunities South American Production March Est. Trade Avg. Trade Range Feb. USDA Argentina Corn Brazil Corn Feb. USDA Feb. USDA Feb. USDA

17 Corn Technicals PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

18 Corn Technicals (Cont.) Up trending or down trending market sales or hedges made during up trending markets are optimal. Currently up trending (Just took out September highs) Top third or bottom third of the last 12 months when putting on protection where price is relative to recent history often helps determine whether to put a plan in place with upside potential or not. We are currently somewhere in the middle of the 12 month range. If we run up another 20 cents in the next month and we begin making sales upside potential doesn t seem necessary given the current world carryover at this time. Technical Indicators Moving averages, momentum indicators, etc. Most indicators are very positive which is a good sign.

19 Trading futures and options involves substantial risk of loss and is not suitable for all investors or producers. Thank you for your time Any Questions??? If you have further questions please visit us at or give us a call: Andrew: (605) Mike: (605)