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Grains & Beans


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Grains & Beans

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  #31 (permalink)
Market Wizard
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jokertrader View Post
since stocks/usage is pretty high the spread has narrowed and could even go negative..i..e July less than Nov.
if there is a weather concern.. this might rise
am i reading this right?

trying to make sense of the past Hightower reports

https://hightowerreport.com/2014/04/jul-nov-soybean-spread-out-of-whack-with-the-fundamentals/

and

https://hightowerreport.com/2013/04/upside-potential-for-julynovember-soybean-spread/

Yes, this is the reason why I currently do not trade the SN-SX.

Corn is planted much earlier than beans. If it is not possible to plant corn in some regions, farmers might switch to beans. If weather is perfect for planting corn everywhere, farmers might switch from beans to corn. Similar relations exist between beans and spring wheat and cotton.

Best regards, Myrrdin

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  #32 (permalink)
Market Wizard
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Today at 11.00 am (Chicago Time) or 18.00 (Central European Time) the monthly USDA report regarding grains, beans, and cotton will be published.

I do not expect it to be a longterm market mover, as everybody is looking at the weather forecasts.

Best regards, Myrrdin

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  #33 (permalink)
Market Wizard
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Weather markets are difficult to trade.

I currently hold a careful long position in soybeans:

SX AUG C10 - SX C11, which currently is available for a credit of approx. $ 200. My considerations:

Either the soybeans market stays weak, and the long options expiring on July, 21st, remain below $ 10. At this date, the weather forecasts for the critical time in August are already known. Thus it should be quite safe that the SX C11 Options remain below 11 and expire worthless.

Or the options expiring on July, 21st, close above $ 10. In this case the trade should be profitable at this time, and I can decide to liquidate the whole position or to sell or let expire the long calls only, and keep the short SX C11.

Or there is a strong move upwards soon. In this case the trade should be profitable, and I could liquidate all positions.

Any thoughts are highly welcome.

Best regards, Myrrdin

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  #34 (permalink)
Market Wizard
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In corn I hold a similar position as for beans (see earlier post):

Long CZ , short 2 * CZ SEP C4.50 .

This position is more agressive than the soybeans position.

My considerations are similar than for the soybeans trade.

As my long position is an outright future I have a stop below the March low. In case I am stopped out it is rather safe to assume that the short calls will expire worthless.

I will take profit and liquidate the total Position on a close above 4.50 (in this case 50 % of the options would be uncovered and in the money) or on a clear reversal.

Best regards, Myrrdin

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  #35 (permalink)
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Interesting post from Twitter:

" Arlan Suderman‏*@ArlanFF101 34 Min.
Vor 34 Minuten


1987 and 1994 were the two years that we know of in warm ENSO cycle like this year. '87 was warm and wet, while '94 cool/wet. Both big ylds. "


Fits to the old saying "Rain makes Grain" .


Best regards, Myrrdin

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  #36 (permalink)
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For the corn are u expecting to leave the Sep calls and close out the long future on a summer rally ? Or if we get a rally will u close the whole position out? I have Short Aug strangles 405/365 and sept wide strangles 450/360


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  #37 (permalink)
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jokertrader View Post
For the corn are u expecting to leave the Sep calls and close out the long future on a summer rally ? Or if we get a rally will u close the whole position out? I have Short Aug strangles 405/365 and sept wide strangles 450/360


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It is hard to say if and how far and how fast corn price will move upwards. It all depends on weather.

Critical pollination period for the US is in July.

There are several realistic possibilities:

1. Weather forecasts get worse. In this case, corn price will move upwards, and might go beyond 450. In this case I will liquidate the whole position, as the trade should be profitable at this time, and half of the short calls are uncovered.

2. There is more weather premium built into the corn price, but the weather threat does not materialize. Corn price might move up to somewhere between 4.20 and 4.50. At some point it will be clear that pollination is not in danger, and corn price reverses sharply. In this case I might sell the futures and keep the short calls.

3. If there is more rain in the forecasts prices migh move back soon. In this case I intend to sell the futures and hold the short calls.

4. Something unexpected happens. This is why I use a conservative strategy, and keep lot size at a moderate level. In this case there is a high probability that I liquidate the whole trade.

I consider holding short corn calls currently a risky strategy - you are dependent on the weather. In many years it works out fine, but there are exceptions. The CQ C405 is very close to the money. The only naked calls I currently consider are WU calls. But I should add that I intend to sell them against a long position of MWN outright futures.

Best regards, Myrrdin

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  #38 (permalink)
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i hope to hold not too long for the 405 calls.. I hope i can survive 2 weeks. then take it off.. otherwise i might have to go long futures if it starts showing movement or sell more put spreads etc

thanks for your thoughts in-depth as always

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  #39 (permalink)
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Here is an article explaining that traders currently move to Corn instead of Soybean
Inside Futures: Relevant trading-focused information authored by key players in the futures, options and forex industries

CoT data and seasonals supports Corn prices now.
Chart structure suggest that is may break out of the trading range to the upper side.

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  #40 (permalink)
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jokertrader View Post
i hope to hold not too long for the 405 calls.. I hope i can survive 2 weeks. then take it off.. otherwise i might have to go long futures if it starts showing movement or sell more put spreads etc

In trading I find that 'hope' isn't normally a good thing

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