Ag trade ideas

Posted this in another place few days ago, but maybe it will be useful or someone will answer some questions:

Interesting blog about grains
fredruel.myhostpoint.ch/
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Some interesting ratios. Didn't find anything about Kub's average. Maybe someone knows more.


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I read this:
Meal is the strongest leg of the bean complex by far as domestic usage continues to be phenomenal. August board crush made new contract highs on Thursday at $1.30 ½ and meal outperforms oil again. With crush margins so good, processors should be pushing for beans, and it’s probably worth looking at bull spreading the Aug/Sep beans when it trades towards the recent lows at 7 or 8 cents inverse.
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Soybean chart in that moment

Soybean crush in that moment.


I didnt manage to understand, why the need of beans will push up spread? during half of july spread was in flat, the need of beans is kinda constant during last weeks and now suddenly it will go up.

But the spread rose!
q53aa3a.png
 
Vyki said:
Also i bought kcbt-cbot december wheat spread @5.25
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Feeding Damaged Wheat to Livestock
http://www.agweb.com/article/feeding-damaged-wheat-to-livestock-NAA-university-news-release/
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I know I saw this trade mentioned the other day, but can anybody explain a bit more what is the fundamental reason behind expecting KCBT to outperform ZW? I checked it out on scarr and definitely see where it looks quite low compared to usual, I just didn't know the fundamental reason if there is one.
 
I am short CBOT wheat, funds bought almost 20 MT on the last weeks which is big. CBOT wheat increased compared to KCBOT & Euronext wheat and is now very expensive (EU wheat was exported to mexico).
It seems that fund overbought this product even if US production should be good and above last year production.
Then I short ZW (CBOT wheat), went long KW-ZW and long EBM-ZW.
 
FCXoptions said:
what is the fundamental reason behind expecting KCBT to outperform ZW? I
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I don''t know what lies behind seasonality, i've written my thoughts here, (it's in russian), main idea:
1)usually KCBT is higher, because there is more protein (13.5% vs 11,5%).
2) this summer because of huge precipitation in CBOT wheat region, price became almost equal. So, when weather improves, it would be returning to normal. Also, as written in the article "Feeding Damaged Wheat to Livestock" more low quality CBOT wheat will go to feeding, so it should compete with corn, this is also a bearish factor
3) Also export. There is more export of KCBT then CBOT, so when prises of both wheats are lower, this will be bullish factor for the spread too
 
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I have no luck lately...I was working ZS U/X @ 1.75 carry since last week...Yesterday it went to 1.5 carry before going right through my target @ 2.25 inverse intraday...At least the idea was valid it seems...LOL:(

Also my long ZW / Short MW went 2 times within 1 point of my target without touching it...And as everyone says ZW is overbought now...:(
 
Vyki said:
I dont know if lower quality of CBOT wheat is bearish. CBOT has a specified quality. Thus more lower quality wheat imply less volume of CBOT wheat. Lower quality wheat will trade at a huge discount than CBOT wheat.
Last year we had the same quality problem for Euronext wheat (a lot of rain), at first the markets traded lower but later on as French low quality wheat was exported to east Asia (which is unusual) and wheat feed consumption was running high, Euronext wheat bounced back.

The only bearish part in lower quality wheat is that wheat importer dont want to buy a wheat from an origin with so many bad stories on it.
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