Below is forward I received from Steven Knuth owner of AgWest Commodities; he said i could post this on the blog. I guess he seen some posting that i do once in a while at http://www.talk.newagtalk.com
He welcomed his information to be put out to help inform producers; make sure to check them out at www.goagwest.com
Below is the forward.
He welcomed his information to be put out to help inform producers; make sure to check them out at www.goagwest.com
Below is the forward.
Steven Knuth
AgWest Commodities
Past performance is not indicative of future results. There is substantial risk involved in trading futures and options which may not be suitable for everyone. However, the risk involved with purchasing options is limited to the premium paid plus transaction costs.
*Updated: May 18th, 2012*
Closing Prices:
DEC. 2012 CORN $5.37
NOV. 2012 BEANS $12.88
JULY 2012 KC WHEAT $7.05
Weekly Change (2012 New Crop) Corn was up 32 cents, Beans 33 cents lower and Wheat finished the week up 95 cents.
Wheat – The Unlikely Leader
Both the U.S. and World wheat inventories are huge but that didn’t stop the wheat market from becoming the upside leader for the week. Hot and dry conditions are prompting concern of yields being trimmed in winter wheat country and earlier this week, Strategies Grain lowered its European Union wheat production estimate for 2012/13 by 4.2 mmt. Traditional funds have been camped on a very large short position in wheat for a very long time and recent weather developments have been enough of a catalyst to bank some profits.
Wheat fundamentals are more negative than for either the corn or beans, which makes wheat an unlikely leader to higher values. That said, this has similarities to the beginning of the 2010 bull market when weather prompted massive fund short-covering in the wheat. Short-covering alone will not create a raging bull but it has so far been enough to technically turn the trend higher after a prolonged, year-long downtrend. HAVE YOUR NEXT SALES TARGET PLACED AND ROLL ORDERS CONFIRMED WITH YOUR BROKER.
July KC Wheat
Corn Follows
For the meantime, the wheat and corn markets are connected at the hip as some substitution of wheat in feed rations is being assumed to ease pressure on the short supply of old crop corn. If corn doesn’t follow along, wheat will quickly price itself out of the market as a feed substitute. December corn posted a low of $4.99 last Friday but this week’s rally has it poised to challenge overhead resistance at the multi-month downtrend line. A continued wheat rally could provide the necessary momentum for a much needed trend reversal in corn. Cheer those wheat traders on!
December Corn
Do You Have ALL Your Beans Hedged?
Beans are in quite the opposite position of wheat. The fundamentals are bullish but the technical view has turned decidedly bearish and the funds are VERY LONG of beans. In the face of an explosive wheat market and a decent rally in corn this week, the bean market struggled to hold steady. Current prices provide strong profitability in 2012 . . . if you haven’t done so already, GET YOUR BEANS HEDGED!
November Beans
Volatility Is Your Friend
Growing season volatility is increasing and that is a very good thing. When you’re marketing under a structured plan that can take advantage of extended moves in either direction, the more volatility the better! Higher prices are always the most desirable but no matter which direction markets are moving, you have the luxury under this plan to hope the move has legs. The key to the success of your plan is to be prepared for whatever the market does next. Do yourself and your broker a huge favor by having ALL appropriate roll orders in at all times.
REMINDER: At our winter Outlook meeting we showed a hypothetical range for 2012 corn prices (futures). The high was $8.50 and the low was at $3.00. Here we are in the middle of May and EITHER end of that range is easily argued and certainly possible. How does one market when there is a potential $5.00 range in price? You cover your downside risk and hope for higher values to sell into . . . you do it exactly the way you are and most importantly, “just keep doing the next right things”!
“CORE HEDGE PLAN” DIRECTIVES
*2012 Corn*
**NEW DIRECTIVES: Sell next 10% @ $5.58 Dec. 2012 futures.
If not already covered with Puts on unsold production, talk with your broker immediately!
CURRENT OPTION POSITION: Dec 2012 550 Puts on 65% of anticipated production.
2012 CASH SALES TO DATE: Total of 35% forward contracted: (04/20/11 Sold 10% @ $6.00 Dec. 2012 futures) (06/08/11 Sold 10% @ $6.24 Dec. 2012 futures) (07/13/11 Sold 10% @ $6.42 Dec. 2012 futures) (10/27/11 Sold 5% @ $6.13 Dec. 2012 futures)
RECENT ACTIONS: None
**NEW DIRECTIVES: Sell next 10% @ $14.20 Nov. 2012 futures
If not already covered with Puts on unsold production, talk with your broker immediately!
CURRENT OPTION POSITION: Nov 2012 1240 Puts on 70% of anticipated production.
2012 CASH SALES TO DATE: Total of 30% forward contracted: (09/12/11 Sold 10% @ $14.00 Nov. 2012 futures) (02/03/12 Sold 10% @ $12.36 Nov. 2012 futures) (3/30/2012 Sold 10% @ $13.69 Nov. 2012 futures)
*2012 Wheat*
RECENT ACTIONS: Sold next 10% @ $6.79 July futures.
**NEW DIRECTIVES: Sell next 10% @ $7.56 July 2012 futures
If not already covered with Puts on unsold production, talk with your broker immediately!
CURRENT OPTION POSITION: Sept 640 Puts on bushels not covered through insurance revenue products.
2012 CASH SALES TO DATE: Total of 60% forward contracted: (03-31-11 Sold 10% @ $9.00 July 12 Futures) (07-19-11 Sold 10% @ $8.36 July 12 Futures) (08-25-11 Sold 10% @ $8.79 July 12 Futures) (12-30-11 Sold 10% @ $7.26 July 12 Futures) (01-26-12 Sold 10% @ $7.26 July 12 Futures) (05-18-12 Sold 10% @ $6.79 July 12 Futures)
*2012 Energy Inputs*
RECENT ACTIONS: None
Natural Gas:
Directive: If not already booked, purchase 2012 summer/fall usage, for those with current call hedges, call Katie
NewDirective: Place orders to buy $4.00 Calls @ 50 cents per mmbtu on all 2013 and 2014 usage. These can be filled now!
Diesel:
Directive: If not already hedged, buy Aug.-Nov. 295 Calls @ 25 cents/gallon
Propane:
Directive: Buy July-Oct. 110 Conway pipeline Calls @ 20 cents
Past performance is not indicative of future results. There is substantial risk involved in trading futures and options which may not be suitable for everyone.
However, the risk involved with purchasing options is limited to the premium paid plus transaction costs.
866-WE HEDGE AgWest Commodities, Holdrege NE 308-995-8067
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