This is a sample entry from Craig Turner’s email newsletter, Turner’s Take, published on April 21, 2014.
In this issue:
- Soybeans: Chinese Cancellations Pressure Market, Reports of More Brazil Cargos on their way to the US
- Wheat: Weather Improves, Black Sea Region Quieter
- Corn: Corn Follows Beans and Wheat Lower, Good Planting Weather
- Energy: Staying bear spread in Natural Gas and Crude Oil
1) SOYBEANS: Chinese Cancellations Pressure Market, Reports of More Brazil Cargos on their way to the US
Reports of Brazilian cargos to China being cancelled due to lack of letters of credit continued over the weekend and into today. We also heard reports/rumors of more soybeans coming to the US from Brazil. This lead to Soybeans selling off early and at one point July Beans were down 29 cents today. Beans did close strong and only finished 14 cents in the red. Bull spread held firm as July/Nov closed at $2.64 (up 1 cent) and SX14/SX15 held firm at 40 cents.
We heard a lot about long liquidation today and fund selling. Exports were disappointing this morning and did not help the market at all. Old Stocks remain tight and as we head into New Crop planting, weather will be a story. For now I still like SN/SX to go to $3.00 due to old crop tight stocks story. If we break the trend line around $2.30 we could be heading lower, but I think we see $3.00 first unless the US gets a very large influx of Brazilian Soybeans.
I like bull spreading SX14/SX15 in the short term in case there are planting delays or weather issues with the new crop. We are flagging a little bit on the charts. Keep an eye for a close below 35 cents (bearish) or a close above 45 cents (bullish). In the long term I do like owning bear put spreads on Nov Beans as I do think that with a decent crop SX trades below $11.00 by harvest.
Open Position: Long Nov 14 Soybeans/Short Nov 15 Soybeans from 39’0 cents (premium to Nov 14).
SX14/SX15 Daily Chart:
SN4/SX4 Daily Chart:
2) WHEAT: May Wheat 27 Higher in Overnight despite Bearish Fundamentals
Wheat traded 23 cents lower today as tensions in the Black Sea (Russia/Ukraine) ease and the weather forecasts in the next few weeks are favorable for US Wheat conditions. We are bear spread WZ/WN at -23’0 cents. This spread has traded down to -39 in 8 of the past 10 years (2004, 2005, 2006, 2007, 2008, 2009, 2010, and 2013. The US will have an adequate supply of Winter Wheat this year, world stocks are going higher, and with the current high cost of US Wheat we are not competitive on the world export market compared to the Black Sea and Europe.
Open Position: Long Dec Chicago Wheat & Short July Chicago Wheat at -23’0 cents, premium to Dec. Risk 9 cents to -14’0. Target is -39’0, or gain of 16 cents. Margin is $450 per spread.
WN/WZ Daily Chart:
3) CORN: Staying Bear Spread CZ/CN – Corn Supplies Adequate
We are bear spread CZ/CN from +8.50 cents (premium to July) and continue to hold. Old crop supplies are adequate and with the USDA increasing exports 125mm bushels to 1750mm, we could have a situation where stocks increase due to the USDA overestimating export demand. Old crop is quickly becoming a known quantity, while the uncertainty of new crop adds weather premium to Dec Corn. Acres were low at 91.7mm from planting intentions, but many are expected acres to be added in the June report with corn trading around $5.00. CN/CZ is currently trading around +6 cents, which is a small inverse. When you combine adequate old crop supplies with new crop weather premium, I think CN/CZ trades to a modest carry, maybe -10’0 in the next month or two.
Open Position: Long Dec Corn/Short July Corn from +8.50 cents (premium to July).
CN/CZ Daily Chart:
4) ENERGY : Stay bear spread Crude and Natural Gas
We are bear spread July/June Crude from +$1.00 and Oct/July Natural Gas from +0.015. We are around break even on both trades. I am bearish on Crude and Natural Gas due to the fundamental outlook, technical analysis, and seasonal patterns. I think that the situation in Russia/Ukraine is keeping energy prices higher but these types of geopolitical situations are usually short lived.
CLM/CLN Daily Chart:
NGN/NGV Daily Chart:
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