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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