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Home / Futures Blog / Turner’s Take – Grains Sell Off After the Long Weekend

Turner’s Take – Grains Sell Off After the Long Weekend

April 22, 2014 by Craig Turner

This is a sample entry from Craig Turner’s email newsletter, Turner’s Take, published on April 21, 2014.


In this issue:

  1. Soybeans: Chinese Cancellations Pressure Market, Reports of More Brazil Cargos on their way to the US
  2. Wheat: Weather Improves, Black Sea Region Quieter
  3. Corn: Corn Follows Beans and Wheat Lower, Good Planting Weather
  4. Energy: Staying bear spread in Natural Gas and Crude Oil

STRATEGIES USING COMBINATIONS OF POSITIONS, SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG OR SHORT POSITION.

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:

SX14-SX15

SN4/SX4 Daily Chart:

SN4-SX4

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:

WN-WZ

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:

CN-CZ

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:

CLM-CLN

NGN/NGV Daily Chart:

NGN-NGV

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Risk Disclosure

STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.

STRATEGIES USING COMBINATIONS OF POSITIONS, SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG OR SHORT POSITION.

THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.

YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.

GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.

Filed Under: Turner's Take

About Craig Turner

Craig Turner is a Senior Broker at Daniels Trading, author of Turner’s Take newsletter, and a Contributing Editor for Grain Analyst. Craig is often quoted in the Wall Street Journal, Reuters, Dow Jones Newswire, Corn & Soybean Digest, and also makes appearances on SiriusXM – Rural Radio Channel 80 providing commentary for the Grain and Livestock markets. Craig has also been featured in FutureSource’s Fast Break series, Futures Magazine Online, and INO.com. Mr. Turner has a Bachelors from the Rensselaer Polytechnic Institute (RPI) where he graduated with honors and has worked at the NYSE and Goldman Sachs. While at Goldman, Craig earned his MBA in the NYU Stern executive program. Learn more about Craig Turner.

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Risk Disclosure

THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.

YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.

GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.

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