Grains & Softs

[schizo]

Cotton futures hit a contract high today with a decent amount of volume. But I notice that the open interest is low. In fact, it has been waning for the last two months, which I would normally find worrisome. But, this being cotton, who knows.

BTW when does March contract roll over into May?

In addition, this analysis caught my eyes:

The National Cotton Council projects that US producers will plant 12.5 million acres to cotton this year, up roughly 14% from last year and lower than some previous private estimates. With an average abandonment rate and average yields, that would point toward a 19.2 million bale crop and be about 900,000 bales larger than this year. The U.S. acreage report will be out officially March 31st. Certificated stocks dropped slightly from the previous day to 166,876 bales.

Where do you get all these info and, moreover, does it really matter?

 

[austinp]

Now that CL trading is closed while ES trading session never opened to begin with today, let me share a couple of learnings per the grain futures

#1: When grain futures make big trend days, it is a steamroller. Huge money to be made repeatedly hitting the trend.

Grain futures are the second-best breakout instruments (CL reigns supreme in that category) and they will move straightline to lock-limit moves between the bells.

Lock-limit moves can last more than one day and more than $5,000 per contract, even double that. So playing mean-reversion tactics is statistical suicide. Fade the grains long enough and your account will be emptied.

#2: Soybeans are the most dynamic, then wheat, then corn

#3: All grains have a distinct habit of pivoting from a certain level more days than not. When you see a certain level hold resistance and then support and then consolidate, assume it is a pivotal magnet to trade off.

These levels are not based on anything consistent I ever found: not vwap, not moving averages, not prior levels, etc. Just know that supply/demand sets up shop at distinct points more days than not.

#4: Spring is planting time and fall is harvest time. Weather reports, crop reports and acreage reports can and will cause limit-up or down moves intraday without warning.

Think of these as fomc or non-farm payroll reports on steriods for stocks, and you've got it about right for grains.

#5: skip the first five minutes of pit-session trading for entry attempts... sit out the early ripsaws until around 10:35am eastern (opening bell is 10:30am) and you will avoid nine whipsaw chops for every one directional trade entry missed.

Those are a few high notes on grains off top of my head

 

[olias]

Schizo, I think you should google Tim Hannagan's grain report. He updates every couple of days and he's been at it a long time. It may help you understand how the grains work in relationship to each other and other markets, like Crude.

 

[austinp]

An example from today's ZS:

Price be-bopped sideways for the first three hours, with the 1422 ~ 1423 zone being the pivotal congestion area on swings either way.

Around 1pm it began to push higher from the magnetic zone, a key time in this market being 1pm into the 2:15pm close of pit trading.

Long a position 1423 > stop 21 (-$100 risked) and long another 1425 > stop 1423 on both (free trade and -$100 risked) worked to 1434 price target for +$500 per contract, and done.

ES by relative comparison didn't even trade thru a $500 range all day. ZS made a bigger straightline trend than that in its final hour.

Done with the workday before 2:30pm et with grains and crude. Life could be worse than getting serious about trading ZS or ZC or ZW with focus

 

[dafeeder]

Quote from austinp:

An example from today's ZS:

Price be-bopped sideways for the first three hours, with the 1422 ~ 1423 zone being the pivotal congestion area on swings either way.

Around 1pm it began to push higher from the magnetic zone, a key time in this market being 1pm into the 2:15pm close of pit trading.

Long a position 1423 > stop 21 (-$100 risked) and long another 1425 > stop 1423 on both (free trade and -$100 risked) worked to 1434 price target for +$500 per contract, and done.

ES by relative comparison didn't even trade thru a $500 range all day. ZS made a bigger straightline trend than that in its final hour.

Done with the workday before 2:30pm et with grains and crude. Life could be worse than getting serious about trading ZS or ZC or ZW with focus

What Futures Broker do you use if you don't mind me asking?

 

[austinp]

Quote from dafeeder:

What Futures Broker do you use if you don't mind me asking?

I have accounts with Mirus and Global Futures, both are excellent imo

day-trade margins and Ninja platforms, all electronic commodity futures contracts available, etc

 

[schizo]

Quote from olias:

Schizo, I think you should google Tim Hannagan's grain report. He updates every couple of days and he's been at it a long time. It may help you understand how the grains work in relationship to each other and other markets, like Crude.

Thanks for the heads-up. I'll look into it. On a side note, how much weight, in your opinion, do you give to fundamental analysis over price action?

 

[schizo]

Hi Austin,

I always find your posts valuable so thanks for your contribution. As you might already know, I have an extensive knowledge of the equity market (ES) and, to a lesser extent, of the crude oil (CL). I proudly wear the badge of honor from the TA camp. As I stated above, I believe everything is reflected in the price. But suffice to say I'm still learning everyday. One of the things I'm interested in these days is the intermarket analysis, especially within the realm of commodities.

Quote from austinp:

An example from today's ZS:

Price be-bopped sideways for the first three hours, with the 1422 ~ 1423 zone being the pivotal congestion area on swings either way.

Around 1pm it began to push higher from the magnetic zone, a key time in this market being 1pm into the 2:15pm close of pit trading.

Long a position 1423 > stop 21 (-$100 risked) and long another 1425 > stop 1423 on both (free trade and -$100 risked) worked to 1434 price target for +$500 per contract, and done.

ES by relative comparison didn't even trade thru a $500 range all day. ZS made a bigger straightline trend than that in its final hour.

Done with the workday before 2:30pm et with grains and crude. Life could be worse than getting serious about trading ZS or ZC or ZW with focus

 

[JPope]

I could see someone arguing that everything is already priced into the Equities markets, but the grains are just not that efficient, in my opinion.

 

[increasenow]

Quote from schizo:

Take a look at the attached chart. It's a 30-minute chart spanning the past 20 days. As you can see, corn had the largest move (12.75%), followed by wheat (9.96%) and soy (0.48%).

over 20 days, Corn may have advanced more but per intraday (within the actual trading day)...here are the average high to low daily ranges...

Soybeans 24 points
Wheat 23 points
Corn 15 points

Source: www.barchart.com