Straddle, Spread, Breakout - The Greenrush Capital Journal

Quote from Drew Klein:

Long-term, fundamentals remain strong for corn and beans, less so for wheat, in our opinion..
More...
Why good beans, weak wheat? I'm interested in your fundamental argument.

My argument from the other side:

Last WASDE has 33% greater ending stocks of beans than any time in more than 20 years. With soy oil languishing, crushers are really only able to sell meal at a good price.

The only strong fundamental argument for beans I can come up with is that farmers are being so strongly incentivized to plant corn, they may not plant any beans. :-)

Wheat fundamentals would seem to support a reasonably strong price. The export business has dried up, which is a cause for concern. Otherwise, our disappearance/ending stock ratio will be in the top 5 for the last 20 years.
 
Quote from FullyArticulate:

Why good beans, weak wheat? I'm interested in your fundamental argument.

My argument from the other side:

Last WASDE has 33% greater ending stocks of beans than any time in more than 20 years. With soy oil languishing, crushers are really only able to sell meal at a good price.

The only strong fundamental argument for beans I can come up with is that farmers are being so strongly incentivized to plant corn, they may not plant any beans. :-)

Wheat fundamentals would seem to support a reasonably strong price. The export business has dried up, which is a cause for concern. Otherwise, our disappearance/ending stock ratio will be in the top 5 for the last 20 years.
More...

Hey Fully...
The bean:corn price ratio is so far out of whack, that in our opinion, it all but assures that US farmers should have no incentive for planting any beans this year. Crop rotation aside, of course they will plant beans, and we'll see how many acres the USDA shores up in the March report. Our thinking is that we will see this ratio move closer back to some kind of normalcy, the kind of normalcy that you may see in a market obsessed with biofuels and with hugely leveraged indexers...Maybe just under 2:1...

As for Wheat, she's a weed, and she always has been and always will be. Australia is producing a monster crop this year to make up for their drought-ridden episode last year....and rationing and export cancellations (as you mentioned) appear to be a driving force behind this market along with the rest of the grains...

If we do gap and crap today in the grains, we may have a lookout below situation...It may be short-lived, but it could be extreme...
 
Quote from Prevail:

Hi drew, are you a new cta, why is there no performance info in your d-doc?
More...

Hi Prevail..
Yes, a new CTA..
Started trading client funds in January..
 
I would say...PUNT...

Quote from Drew Klein:

CURRENCY SPREAD - BUY MARCH CANADIAN DOLLAR, SELL MARCH AUSTRALIAN DOLLAR

Analysis
The first thing you should be aware of is that futures spreads, despite the reduced margins, are no less risky than outright positions. I like this spread because both the Loonie and the Aussie tend to trade very technically. While we anticipate the US Greenback to strengthen in the coming months, we project that the Australian Dollar will fall further and faster than the Canadian Dollar. More specifically, technical analysis is pointing to an inverted head and shoulders pattern (see chart below) and our desired risk for the spread is quite explicit.

Trade Details
Buy the March Canadian Dollar and Sell the March Australian Dollar between 775 and 790, premium to the buy side.
Margin required (may change) = $918/spread
Risk a close below 645 ($10/point)
More...
 
Quote from Drew Klein:

I would say...PUNT...
More...
I'm not sure what this means--the AD has stayed strong, but the CD looks to have found a bottom, amazingly enough. I entered this trade March 1st and have been pretty happy. We'll see going forward, though. :-)
 
You must log in or register to reply here.
Back
Top