Getting taken by wheat

[grainmerchant]

Great demand for U.S. wheat due to cheap U.S. dollar. Farmers have sold more crop (as a percentage of harvested production) than they ever have, so the bushels are in the commercials hands. Railroads are behind as there is too much wheat moving all at once. ALL COMMERCIALS WILL SELL WHEAT BECAUSE OF THE INVERSE IN THE FUTURES SPREADS. Be very careful trying to be long this market. Day trade it maybe or keep some options on as a stop if you're position trading it. Russia recently stealing some of the U.S. export sales. Be on the lookout for export cancellations. European Union allowing set aside acres to be planted to wheat this fall. Could add up to 10% to European acres next spring.

Oh yeah, and buy a put, look at a chart...whose at risk here....the LONGS.....the market may not have topped yet, who knows....but when it retraces.... it'll take a quick deep bite into the longs.

GM

 

[Optionpro007]

Quote from scriabinop23:

So now that grains are no longer in fashion, is anyone finding this dip in wheat (and everything else) attractive as a buy? This looks classic fade the crowd (crowd: harvest season hedgers, funds forcing the issue).

Who's in the camp the bull is dead? Any bulls left? Some export #s and crop status #s come out tommorow. Anyone think there's support in wheat anytime soon?

Interesting how a day or two of rain in Australia and Brazil and no more grain demand left.

Even though I don't trade news, here is something you might find interesting.

Why markets behave the way they do means little imo. Profiting when they do move is all that matters.


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U.S. Rain

Prices plunged by the exchange limit of 30 cents yesterday after rain moistened dry ground in the southern Great Plains as U.S. farmers plant the winter crop. The U.S. is the world's largest wheat exporter. The commodity has dropped 9.7 percent in the past four days, the biggest four-day slump since the four days ending Nov. 19, 2003.

``If we get a normal winter, the supply-and-demand scenario will improve a lot, so it seems good timing for the funds to liquidate their long positions,'' Unipac Grain's Chino said.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=agT.Ln6LzPg8

 

[PohPoh]

Quote from stupididiot:

Man, what the frig is up with this market?! I guess because it's gold colored, wheat is going to be 1:1 priced with the shiny metal. I'm getting reamed shorting this puppy! When will the agony stop???

Except it's not...
1 contract of wheat at $8.00/bushel is worth $40,000
1 contract of gold at $800/oz is worth $80,000...

 

[nazzdack]

He meant silver, not gold.

 

[lachie74]

I'm Long ZW
Dec 07@860.5

 

[Hook N. Sinker]

I remember about year 1987 reading and hearing many projections about the world's population experiencing food shortages about year 2005. I recall food shortages were projected to be especially severe in China because of the rapidly increasing population there. Perhaps these projections are still valid. I suspect the world human population is increasing and people want to eat. The increasing prices now appearing for agricultural products might be the beginning of a very long term price change. Agriculture might become more important than oil in the next 30 years.

I do not read much about food shortages now, it appears to be non-news these days. The underlying problem might still exist.

 

[scriabinop23]

Quote from Hook N. Sinker:

I remember about year 1987 reading and hearing many projections about the world's population experiencing food shortages about year 2005. I recall food shortages were projected to be especially severe in China because of the rapidly increasing population there. Perhaps these projections are still valid. I suspect the world human population is increasing and people want to eat. The increasing prices now appearing for agricultural products might be the beginning of a very long term price change. Agriculture might become more important than oil in the next 30 years.

I do not read much about food shortages now, it appears to be non-news these days. The underlying problem might still exist.

I think the use of food as an energy source for cars is not a fundamental helper (soybean oil, corn for ethanol, etc).

But at the same time, also note that yields of all this stuff has gone up exponentially due to genetically modified seeds, improved technology, price incentive, improved pesticides, etc.

Once we get our energy needs straight (err go to nuclear and keep crops as solely a food source), I think times aren't so rough ahead ... unless these droughts worsen.

 

[youngtrader]

I think we are basically going to be rangebound in the old crop from now on. Obviously we can not support any higher prices but remember we are actually scraping the bottom of the barrel of the worlds wheat supply so prices will be supported. Remember you cant cull the human herd like you can the hogs and cattle.

As the saying goes theres always more crop than what everybody thinks. I think the upside though is in the new crop. Guys have been beating down this july contract forever with the thinking of huge acres. I think we have just about put as much bearishness into the july contract as we can. If we get any sort of news that comes out saying that the crop is in iffy shape going into dormancy then I think new crop could shoot through the roof because this has to be a no error crop in order to make up for the tiny supply we have. Look at the march/july spread. It has dropped almost a dollar from its highs. selling july/dec might not be bad eather.