Texas Hedge

[TOM4CWB]

I see the long term bull soy isn't broken yet... but is bouncing off the bottom of the range... 200day average as well! Corn dropped to $4.08 from $4.50... good weather could break this hard down... feed wheat easily under $5.

[crusher]

If overall crops in Canada and U.S. are like mine, top yield was determined a couple of weeks ago and all we can do is hope that we can maintain what we have. Just because the weather has changed for the better in most areas, doesn't mean the supply will start to increase.

Fundamentals are ruled by supply and demand. I think if I was a buyer of wheat, I'd see that chart and go this is about as low as it goes and I'm going to get some coverage. Maybe even the short funds might take some profits. Always lots of opinions, that's why there is a market.

[Oliver88]

Crusher, Tom or anyone - for a call option would you use Chicago, KC or Minne?

My broker suggests Chicago but would like to hear your comments.

[crusher]

Oliver88,

First question is: are you downright speculating? Or are covering some previous sales of a particular wheat kind. For example if you sold some hard red a while back and want to participate in some possible upside, then go with Minni. CPS - go with Kansas. If you want to just pick a wheat then Chicago is a decent choice because it has the greatest volume/liquidity. I haven't checked but the premiums may be less too. Most of the time the wheat prices are highly correlated.

[TOM4CWB]

Crusher, Right on with Wheat options.

Soybeans yields are made in August... some volatility possible... but normal rain and heat will net a big crop. Looks like the MidWest is short on heat units this year... but a few hot weeks will push this fast! Fabas are back blooming... they will sure be late!

[Oliver88]

Crusher- I would consider it speculating if I am trying to accomplish adding to a sale.
Considering doing one of the following sales.

1) Adding more new crop fixed contracts for wheat a call option to capture gains.
(Not sure which month would be best)

2) Clean out a grain bin and try to gain some upside movement in futures.

[crusher]

Oliver88,

Calls would make a good replacement strategy. You can justify, for example, if you were cleaning bins to cover cash flow needs but still wanted to participate in the market. If you can get a premium now it adds more support to the strategy. I'd be less convinced if you filled a basis contract and replaced with a call. I don't see the need of paying the premium if you wanted to stay long. If prices were at the high end of the trading range then maybe.

Tom,

Still remember a little from the KenAgra classes.

[TOM4CWB]

Crusher,

Seems like a lifetime ago!

Good lessons learned... experience is still the best teacher... margin calls a good reminder how humble we need to be!!!

Cheers~!!!

[blackpowder]

Ken Strickland isnt farming anymore either.