***This commentary is provided for descriptive and entertainment purposes only and is not intended to be used for specific trading strategies or interpreted to be investment advice. *****
Corn Production 2016-17 Marketing Plan September 23, 2017
A: 9/23/17 Harvested grain previously hedged with December futures at 3.99/bu. Bought back December futures at 3.53 and sold cash (-.25 basis) at 3.28 giving a net price of $3.74/bu
B: Sold December futures at 3.53/bu to hedge next 25% of crop to be repurchased and sold on cash in December.
C: Will store next 12.5% of crop unhedged and priced with a .33/bu cost of carry (to July) and sell on a rally.
this will leave at least a portion of the crop at risk but in a position to take advantage of a rally in the cash or futures market.
D: Will store last 12.5% of crop hedged with a 9/23/17 July futures hedge at 3.81/bu and .33 cost of carry.
Reasoning for Futures Hedges:
Fundamentals: WASDE yield estimates of 169/bu indicates a projected price bottom of 3.36/bu with some analyst projects of 167 bu/acre national average capping the projected price around 3.62. This price range does not indicate huge opportunities for big rallies and some potential risk for more loss of value.
Technicals: Although there seems to be a slight uptrend toward the fundamental cap around 3.62 in the weekly chart, with ADX < 20, RSI 46 indicating neither overbought or oversold, volume and open interest plunging don't indicate additional momentum for moves higher. The MACD also has been trending bearish. In the monthly chart, for the last 2 years prices have been trading in a channel with support and resistance very close to the fundamental levels of 3.36 and 3.62.
Given both technical and fundamental indicators aren't reassuring of higher prices + expected post harvest lows, sales and futures hedges + storage made the most sense.
***This commentary is provided for descriptive and entertainment purposes only and is not intended to be used for specific trading strategies or interpreted to be investment advice. *****
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