Quote from options4me:
Quote from traderTX:
HAHA!!....I guess our version of that trade would be N/X beans each year?? LOL!!
QUOTE]
Looks like this would have been a good trade, but missed it a couple months ago.
Better plan ahead for next year....I am going to load up in this next Dec when the spread has been in the NEG values and starting to rise above ZERO. Seasonal charts are also showing there may be a repeating pattern.
Man...what a ride if you got in last Dec...!
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grain spreaders
- Thread starter youngtrader
- Start date
What a report, corn spreads widening out very nicely up 4 cent on z/k10 corn.
Quote from Rtrader2525:
What a report, corn spreads widening out very nicely up 4 cent on z/k10 corn.
Just took profit on z/k corn -- probably too soon but it was a resting limit order from days ago.
Wow -- soybean hell! Shorted the aug-nov bean spread yesterday at 133 since it was looking like a real reversal for a minute -- worked great -- 5 1/2 cents up in just a few minutes -- until I turned to look at a possible eurodollar spread, looked back and WHAM! I found myself in bean hell. Tried to cut losses with limit orders but market ran through my fingertips. After it closed I wrote a nervous email and it gapped back open and kept running. I didn't use a stop b/c of the volatility. Belatedly read news of China's big old-crop bean order but still thought the market should pull back, and finally it did, and I closed out this morning for a 4 cent loss -- ouch! Closed out a little too soon I guess since it could have come away as a profit but a four-cent loss is just fine compared to the nightmare I was staring at. Ate my corn profits up exactly though.
At least my interest rate and energy spreads keeping me on the winning side. But that bean spread scared me, and also I guess taught a little about the old crop new crop dynamics. Though I still don't really understand how much old crop is affected by new crop news under what circumstances, but some tuition has been paid for a teachin' by the markets...
anybody have a fucking clue as to why the hell new crop spreads are up huge on the day????
I just dont understand how there can be no deliveries against july when ending stocks are huge and its a picture perfect crop on the way. All corn spreads should be going off the board at like 80% full carry imo.
I just dont understand how there can be no deliveries against july when ending stocks are huge and its a picture perfect crop on the way. All corn spreads should be going off the board at like 80% full carry imo.
Youngtrader, that is an excellent question. We have to consider a couple of different things. 1) As you noted, July corn is in delivery though no contracts have been delivered. This can, and often does, lead to some peculiar behavior in the spreads. 2) Export SALES are strong. Last week's report showed total sales of 1.741 bb of a projected 1.75 bb. This means that there is some short-term commercial demand in this market that is helping to support the spot-month July.
The weakening carry in the new-crop spreads is fascinating as well, for as you said, carryover stocks are not going to be a problem, and neither is expected production at this point. But, the weakening carry (roughly 65 percent to 70 percent of full commercial carry) in the new-crop Dec/Mar, Mar/May, and May/July spreads would indicate the sharp selloff seen in the market over the last four weeks is starting to generate some commercial buying interest.
However, the longer-term picture is not bullish. I posted a blog item this morning looking at the corn continuous monthly chart and its bearish signals. It will be interesting to see what develops.
The weakening carry in the new-crop spreads is fascinating as well, for as you said, carryover stocks are not going to be a problem, and neither is expected production at this point. But, the weakening carry (roughly 65 percent to 70 percent of full commercial carry) in the new-crop Dec/Mar, Mar/May, and May/July spreads would indicate the sharp selloff seen in the market over the last four weeks is starting to generate some commercial buying interest.
However, the longer-term picture is not bullish. I posted a blog item this morning looking at the corn continuous monthly chart and its bearish signals. It will be interesting to see what develops.
Quote from day4night:
Just took profit on z/k corn -- probably too soon but it was a resting limit order from days ago.
Wow -- soybean hell! Shorted the aug-nov bean spread yesterday at 133 since it was looking like a real reversal for a minute -- worked great -- 5 1/2 cents up in just a few minutes -- until I turned to look at a possible eurodollar spread, looked back and WHAM! I found myself in bean hell. Tried to cut losses with limit orders but market ran through my fingertips. After it closed I wrote a nervous email and it gapped back open and kept running. I didn't use a stop b/c of the volatility. Belatedly read news of China's big old-crop bean order but still thought the market should pull back, and finally it did, and I closed out this morning for a 4 cent loss -- ouch! Closed out a little too soon I guess since it could have come away as a profit but a four-cent loss is just fine compared to the nightmare I was staring at. Ate my corn profits up exactly though.
At least my interest rate and energy spreads keeping me on the winning side. But that bean spread scared me, and also I guess taught a little about the old crop new crop dynamics. Though I still don't really understand how much old crop is affected by new crop news under what circumstances, but some tuition has been paid for a teachin' by the markets...
I just on the sideline w/ beans until next Dec. Way too wide to try to enter a spread now.
Darin,
Great to see you on ET, I enjoy your DTN stuff. Take care.
Great to see you on ET, I enjoy your DTN stuff. Take care.
Quote from Darin Newsom:
Youngtrader, that is an excellent question. We have to consider a couple of different things. 1) As you noted, July corn is in delivery though no contracts have been delivered. This can, and often does, lead to some peculiar behavior in the spreads. 2) Export SALES are strong. Last week's report showed total sales of 1.741 bb of a projected 1.75 bb. This means that there is some short-term commercial demand in this market that is helping to support the spot-month July.
The weakening carry in the new-crop spreads is fascinating as well, for as you said, carryover stocks are not going to be a problem, and neither is expected production at this point. But, the weakening carry (roughly 65 percent to 70 percent of full commercial carry) in the new-crop Dec/Mar, Mar/May, and May/July spreads would indicate the sharp selloff seen in the market over the last four weeks is starting to generate some commercial buying interest.
However, the longer-term picture is not bullish. I posted a blog item this morning looking at the corn continuous monthly chart and its bearish signals. It will be interesting to see what develops.
How do exchange rates affect spreads?
Would a us dollar move affect the curve equally, or would you expect it to affect the front months more? Maybe it would have to do with the market's interpretation of the dollar move as temporary or structural?
Do interest rate / inflation expectations play out on the curve in any way beyond the simple change in physical carry costs?
I'd love to find a study about these more macro sides of futures curves for physical commodities in general.
Would a us dollar move affect the curve equally, or would you expect it to affect the front months more? Maybe it would have to do with the market's interpretation of the dollar move as temporary or structural?
Do interest rate / inflation expectations play out on the curve in any way beyond the simple change in physical carry costs?
I'd love to find a study about these more macro sides of futures curves for physical commodities in general.