Swingtrading for farmers

Corn-Wheat 8-15-2014BTodays(Monday Aug 18, 2014) Wall Street Journal on page C1 has an article “U.S. Farmers Are Up to Ears in Corn”

To no ones surprise, the economic factors that led farmers to plant increasingly more acreage in corn has caused an oversupply of corn just when the demand is declining. This demand fall off is due to a decline in livestock herds and declining purchases from China.

In addition to the supply/demand problem, more farmers in certain parts of the country which have traditional planted wheat have moved to corn due to the changes in weather patterns over the last few years. In other parts of the country, the opposite is happening.

The choice to plant corn or wheat or a new combination of both is happening in farms all over North America.

Fortunately there are ways for farmers to hedge their crops. Traditionally that has been in the futures market.

In September 2011, Teucrium introduced an ETF designed to replicate the returns that mirror the movements in the spot prices of wheat. WEAT. It has developed other commodity ETF’s that follow corn,soybeans and others. The ETF for corn is CORN.  For more information on the construction and costs please go to the Teucrium website.

The following daily chart of CORN versus WEAT illustrates a Swingtrading approach to corn and wheat. Both commodities have been in a decline, but at various times, the better play was to follow the relative momentum. Prices as of the daily close, Friday, August 15,2014

Corn-Wheat 8-15-2014A

and a closer view:

Corn-Wheat 8-15-2014B

For further information on all the topics covered and how you can implement these and many others in your trading plan. Please contact me at rfeit@msn.com See www.relativevalue.com for day trading ideas.