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Markets Hit Pause Button

07/31/2014 @ 2:55pm

The markets hit the pause button this week.  Anecdotal comments continue to show a great crop but weather forecasts are unclear on the amount of rain and/or location for next week.  There continue to be strong export sales for new crop commodities, especially soybean meal and beans. 

It is hard to imagine there will be pre-report estimates tomorrow (Friday, August 1st).  However, the coming week should be full of news tidbits--private crop estimates, the standard Monday crop progress/condition reports, the weather forecasts and the various export reports.  With a sideways tone to prices in the past few days, does this continue next week?  Or is the news (and rainfall) enough to make new lows? 

Many may be hoping that the price slide is over.  Many want a rally to sell the last of the old crop, as well as new crop.  In addition to hoping, farmers can use option strategies to protect from further price slides.  For example, farmers and other market participants have used short-dated options quite a bit this year.  The last of the short-dated options (September) expire August 22nd. 

In addition, there are monthly options to consider.  For example, the October options expire September 26th and the November options expire October 24th.  In exchange for the short time period, the option premiums are less than the longer lasting regular options.  Bullish or bearish, these options can last through one or two crop reports and they can provide farmers with increased marketing flexibility. 

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The risk of loss in trading commodities can be substantial.  You should therefore carefully consider whether such trading is suitable for you in light of your financial situation. 


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