Corn / Oats March spread

F

fpbtm

Hi

It's my first post here.
I am mainly trading futures spreads and options... from France.

I have opened a Corn/Oats March 11 spread yesterday.
This trade is mainly based on seasonality (MRCI identifies a good entry point beginning of January) and "low" value of this spread.

It's the first time I trade Oats :confused:

What do you think of this trade?

Thanks for your help

Fpbtm
 
Here are a few thoughts on the Corn / Oats spread.

The short, intermediate, and long term trends in the ZCH1 - ZOH1 spread all appear to be up at this point in time.

However, be careful with this spread because the Corn / Oats spread tends to be rather choppy.

Also, keep an eye on the ZWH1. Based on the technical and fundamental signals, old crop wheat looks to be ready to take off to the upside again. A strong rally in old crop wheat should drag corn and oats with it.

Based on the rally in wheat, I am looking to get long ZOH1 on a flat price basis.

Good Luck!
 
Here is an update on the Corn / Oats spread.

The short, intermediate, and long term trends in the ZCH1 - ZOH1 spread remain up at this point in time.

The old crop wheat did not take off as I expected. Oats have held up rather well, but have not been able to take out the $3.975 on a closing basis. I played a long position in flat price ZOH1, but the consolidation continued, so I switched to long ZCH1 - ZOH1 prior to the USDA report.

ZCH1 continues to show strength, so I plan to ride the trend in ZCH1 - ZOH1.

Anyone else playing this spread?
 
I agree with emg, this spread has little correlation and may be difficult to manage. Corn stocks at 15 year lows, the corn game has started. I have been trading corn all week and was somewhat surprised by the strength today given the weakness in the wheat. Late in the day bids started appearing in the h/z corn starting at about 73 cents, quickly went to 75 and finished around 78. This is typical of a spread being squeezed,MOC orders on the spread. Reminds me of 1995 when ending stocks were tight, I would go over to the pit at about 1 o'clock buy the nearby and sell it at 1:15 when the MOC buying orders were placed. I think this is what is happeing to the H corn. Also heard today that there is significant farmer selling of new crop corn. That is garbage, real selling is from long in H corn. The game is on, appeared very obvious after today's close.

Regards, local
 
Local:

What number would you put on the Corn - Oats correlation?

I calculated daily correlation between Corn & Oats to be less than correlations between Corn & Beans, Corn & Wheat, and Wheat & Beans. But, the Corn & Oats correlation is still high enough to offer a decent spread opportunity if you can handle the occasional choppiness.

I stepped back from the old crop - new crop Corn spread following the October report due to the choppiness there.

Based on Friday's close, the corn market looks very strong.

How far do you think the old crop - new crop Corn spreads can go?
 
illiniphd,
I wouldn't try to quantify an oat/corn spread, especially given the extremely tight corn carryover, the time of year and the composition of the open interest. Treat them as two separate trades. Personally, I don't like trading oats because of the illiquidity although I did buy oats in the early fall because of harvest problems in Canada,(Canada produces about 1/2 of NA oats). There is a stronger, more rational relationship between old crop/new crop corn that should be more effective. Re cbot wheat , it is being used as the short leg against corn and Kc wheat.

Regards,local
 
Good Morning:

This is a note for anyone interested in trading the Oats on a flat price basis.

It looks like the ZOH1 is finally trying to breakout of the consolidation pattern that began in October.

In my view, as long as prices continue to close above 398.00 on a daily basis, the price trend remains up.

BE ADVISED THAT TRADING OATS IS NOT FOR THE FAINT OF HEART.

I am still holding a long position in the ZCH1 - ZOH1 spread.

Good Luck!
 
Good Evening:

I moved from a long position in the ZC H1 - ZO H1 a spread to a long position in the ZO H1 - ZO Z1 spread.

I think that the old crop Oats will play 'catch-up' with the new crop Oats that continue to make new highs.

According to my charts, Oats are positive on a short-term and a long term basis.

Anyone playing in the Oats market?
 
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