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Wheat Sell Off About Over

1/6/2013

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This wheat sell off was a bit more extreme that I had anticipated.  I thought prices would be supported around $8.00, but sure enough, July wheat fell to $7.56, which happens to be at a place of key horizontal technical support.  If you are feeling a little freaked, I could understand.  Keep in mind however that wheat is at an extreme now, and the market should be poised for a modest bounce.

In the chart below, I have highlighted the actionable places I see on the chart.  I am saving this chart for further reference in the future to help explain the tools I use, and will explain further in a nearby future post.  For now,  know that we are at a useful place in the market to lift hedges or to sell some puts.  The number on the chart is at 16.  This would be in a similar place as the market was back on number 5.  

The plan as I see it would be to lift hedges for now, or to sell some short dated puts.    Price is .42 off the crop insurance floor if you carry an 85% crop insurance policy, so a sale now is not removing that much risk.  The next actionable area would be once prices pushed back into the 200 day moving average around $8.00.  
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Steve Wade and Tyler Wade of Wade Assurance are associated persons for AgDairy LLC.

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The risk of loss in trading commodity futures contracts can be substantial.  You should, therefore, carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

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  • Home
  • Speculation
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    • Futures Contract Specs
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    • Crop Overview >
      • Corn
      • Soybeans
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      • Supply/Demand Factors
    • About
  • Disclaimer