My wheat spreads really moved in my favor yesterday, while my sugar position remained flat. I’m slowly getting back into the rhythm of the market and finding my cadence. I’ll probably end up doing OK.
I was looking at the Pope’s visit and mass at St. Patricks cathedral this morning, and reminiscing about the time my lovely wife and I saw John Paul in Chicago back in 1979. We aren’t Catholic, but still ended up getting an audience with him. I might exaggerate when I say audience, as there were 500 people in the room, and we got within 15 feet of him at the closest. Still, I thought that was pretty cool.
I’ve been playing with my ham radio station the past couple of nights. I don’t talk much about it here, but I’m an avid ham radio operator, and have been for years. I primarily like to operate CW (morse code), and look for distance. I don’t go crazy and have a real big station or antenna system. My antenna system consists of a vertical for hf, a dipole for 40-80, and a 2-Meter antenna for local work. I have an Icom Transceiver, and a cheap little 2-Meter rig. I’ve been finding solace in the ether of the radio spectrum as of late. There have been good openings to Africa in the early morning, and I’ve tried to take advantage of them. As much as I like to work DX, I still will work anyone that wants a ragchew.
I’m excited about my trip in a couple of weeks. I’ve decided to go to Colorado right after New York, to visit some friends there. From Colorado, I’m going to San Blas, (Nayarit) Mexico to chill for awhile. I found a place there that offers a decent room, internet, and isn’t too funky. I’ll probably spend a great part of my time just decompressing at the beach and surfing one of the world’s longest waves.
Have a good weekend.
Jeff
Sounds like great travel plans Jeff.
Judging from the recent action of the wheat complex, if you’re making money then you must be long Minneapolis (holding up), and short Chicago (breaking new down-leg lows) - and I’m guessing you’re in July. You don’t have to confirm if you need to keep it secret.
Based on the COT data I talked with you about earlier and my village-idiot perspective on it, I would have been either long Minneapolis or doing the spread described above.
For me to make near-term money on my grains short ETF, I need Soybeans to come off, since they have a 46% or so weighting in the ETF. I looked at the SK08 chart just now and it’s looking a little soggy. I can see them backing off soon to test the recent low.
BTW, do you ever spread the soybean complex or trade in it? I’ve never heard you mention it.
Cheers,
George
Comment by allocator — April 19, 2008 @ 6:08 pm
George, I didn’t make my spread too hard to figure out
As for beans, I have traded a lot of them, especially this past fall. I use November as my pivot month, and go from there with my spreads. I have put on regular spreads, crush spreads, reverse crush spreads, oil/meal spreads, and a few other spreads. Beans really move when they are in the mood, and there can be lots of volatility. Trading them, one has to put on a position and hold on. Beans don’t fuck around.
Is the beans component in your ETF based on May or November beans?…that could make a big difference in the pricing.
As for sogginess basis the May beans, I can see where you might derive that from the chart. That being said, I’m really bullish long term on beans, like I am the entire grain complex. I don’t know why beans are classified with grains when they are legumes.
This rice shortage is really bullish for beans.
Jeff
Comment by masteroftheuniverse — April 19, 2008 @ 8:24 pm
Hi Jeff,
I should have known you had to have been all over the beans complex over the years - they’re such a big part of the market.
That’s a very good question on the ETF. It tracks the Dow Jones AIG Grains sub-index, with the added complexity of trying to maintain 2x leverage. I’m going to check into it. I’ve never looked into how commodity indices deal with contract expiries.
Your assessment of the rice/beans relationship makes sense. Both are such a key food staple in Asia, with billions of mouths involved.
What do you think of my one-man boycott of Ethanol? Get ready to the pull the trigger on short corn - I’m a man on a mission.
Cheers,
George
Comment by allocator — April 20, 2008 @ 7:45 pm
George,
Your one-man boycott on ethanol means I’ll have to start drinking more
Jeff
Comment by masteroftheuniverse — April 21, 2008 @ 1:06 am
Hey,
It looks like my ethanol boycott worked - that one tank of gas broke the camel’s back. What, we’re limit down this morning on wheat and beans?
Jeff, if you’re feeling like doing something a little wild and crazy, you and John are invited this coming Saturday 26th to my wife Cindy’s 50th birthday party - from 7PM to 1AM at the Canadian Museum of Civilization. I’ve booked the salon that overlooks the Ottawa River right across from the parliament buildings. The format is an indoor/outdoor dance party; open bar + snacks; dress code casual+ (dress up if you want to). I know its a stretch to get here from Sarasota on fairly short notice - but, hey, you’re welcome if you can make it, and I’m just putting it out there if you want to spend a weekend with some wacky Canadians.
Cheers,
George
Comment by George Parkanyi — April 21, 2008 @ 3:30 pm
George,
Thanks for the invite, but I don’t think I’ll be able to make it on such short notice. I’d really like to, but it would be really hard.
Wish Cindy a happy 50th. 50 years old nowadays is like the old 35.
Jeff
Comment by masteroftheuniverse — April 22, 2008 @ 2:18 am
Yeah sorry about the short notice - everyone’s in the same boat. I was only able to find the kind of venue I wanted last Friday.
I’m glad I’m not trying to call a direction on grains - they’re extremely volatile to news (which suggests toppiness on an interim basis). But a guy from Australia commented on my ethanol blog. He lives near Ballarat in Victoria State not all that far from Melbourne. He says they have about 5% water table left, and if they get the same rainfall as last this year, Melbourne is going to run out of water. So grains (wheat in particular) could just as well blow through the roof as halve. At least that’s how it feels to me.
To what extent can farmers switch between corn and wheat (and soybeans for that matter)? Is crop displacement by another really a realistic/significant factor in these markets?
Cheers,
George
Comment by allocator — April 22, 2008 @ 2:49 am
George,
Australia had a bad wheat crop last year, and the predictions for the next crop are mixed.
As for switching crops, the ease of switching depends on the climate of the growing area. In Iowa, Illinois, Wisconsin, and Kansas, it’s really easy to rotate between corn, wheat, and beans. Plant some rye in the fall between crops, and you have nature’s own fertilizer.
Jeff
Comment by masteroftheuniverse — April 22, 2008 @ 3:04 am
Given this rotation flexibility, wouldn’t farmers in those states be incented to swing over to beans? My understanding is that they are hardier than the other two, and right now delivering the best prices. Buy crop insurance, sell them forward in the futures market, and plant - or that too simplistic?
Cheers,
George
Comment by allocator — April 22, 2008 @ 10:53 pm
George,
Many farmers will switch over to beans next season, just due to price alone. Depending on the yield, they can get a great price per acre, even with planting costs etc. The question is….how many acres will go over to beans which we won’t know until the intentions report comes out. However, one can also get a clue how the plantings will go by looking at the seed market and what proportions and amounts of seed stock are produced for next year.
Jeff
Comment by masteroftheuniverse — April 22, 2008 @ 11:11 pm