Ag trade ideas

thefuturestrader said:
The boss where I work thinks long April Live Cattle, short June Live Cattle is the way to go right now. Feb Live cattle comes off the board tomorrow. The cash trade is hanging in around $160 w/ the feedlots and packers. LEJ is at $149, about 11 below the cash trade. I like the idea, 'cause we had a similar gap last month with the feeder cattle. I don't like how that spread chart looks though.
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The reasoning behind that is anticipating April to pull towards spot more strongly than June, causing the spread to grow, right?
 
You know, that spread is a weird one. It did make a move up, but is somewhat stalled out around $8. My very incomplete quantitative analysis of that spread seems to indicate that the spread is somewhat mean reverting. I wouldn't be surprised to see a pullback to around $7.30 or so. If it did get down to $6.60, might be a good entry point to play it even back up to the top side of the range.
 
Are any of you all following the Feeder Cattle/Live cattle spreads? Kind of surprising to see how far off some of the spreads are from the prior 2 years data.

I am seeing some possibilities for mean reversion trades. The spreads do seem pretty far off from historical data for the past few years though.

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FCX, you got it right. The cash trade between the packers and the feedlots was around $159 to $160, a premium of around $8 to the LEJ contract. That gap narrowed today on the around $2 rise in the futures. There was a huge gap between the front month on the feeder cattle contract and the feeder index in January. It looked almost too good to be true, and although the spread was volatile as the contract went towards expiration, there was some money to be had there. Thus, we have been paying attention more to these spreads.
 
TraDaToR said:
Greenie, what do you think about cocoa right now as you seem to be focused on softs?
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If i had to trade it, I like the N-U spread as a short but I think there are better opportunities. I do have a few other trades going on, short the sep-dec wheat spread for one and some livestock spreads. Was also looking at going long meal july outright. I see that you are already in it.
 
I am just wondering what cocoa outrights will do in 2015 after the recent bullish turn...I am already short Sep/Dec and looking at further spreads...

I am short Sep/Dec wheat as well like you, I posted it somewhere.
 
Tradator, I followed you on the soymeal spread. Looked into it some lastnight and liked it so I entered as well. I got in at 1.4 also. I didn't expect an immediate fill because the spread showed 1.3/1.5 but it immediately filled so worked for me.

On the Sept/Dec wheat spread you all are discussing, to confirm I am thinking correctly on both of your reasoning: You are anticipating Sept to pull down to spot more strongly than Dec and to go to full carry, right?

Hope you all don't mind confirming these things. I just want to make sure I truly am understanding the plays.
 
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