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At 07:56 AM 8/17/98 -0500, Kevin wrote:
>Robert W Cummings wrote:
>
>> Bought 99 corn and oats as the first step for fundamental reasons called to
>> cheap to plant .
>
>So you are referring to new crop, Dec 99 corn and oats. Nice story, but
>you are overlooking one important fact. Due to large stocks corn is in a
>carrying charge market. Or to state it differently, Dec 99 corn is a 36
>1/4 cent premium to Dec 98 corn. The prospect of higher prices in the
>future actually is a incentive to plant more next spring.
>
>If you are paying this premium, you are simply paying the elevator
>operator storage and interest to leave grain in his bin. If corn
>supplies get tight, Dec 99 will go discount to Jul 99, which leaves you
>out in the cold on your long Dec 99. Of course, there are about a
>million different scenarios going that far out, but if you are going to
>be long there is no justification at this point to being in anything but
>the front month.
Kevin;
Nice counter thats what makes market and I realize of course the carrying
charges and I sell on rallies calls and usually get back that and much,
much more in premiums from calls. I disagree from a tax long term stand
point and just the nature of position building this is how you do it. Think
of the bottom as a curve not a bottom and then you will understand how this
is done.
>
>> Plus all the bad news the bears can stand. I do expect to
>> buy more later at cheaper levels but so many bears should cause some short
>> covering rallies before I do, maybe. Supply has overcome demand but with
>> the government stocks program
>
>There is no government stocks program anymore. It's now called freedom
>to farm, which means they can plant as much of whatever they want.
>
Not even true
The Government did away with pic but they still have eec stocks and always
will for defense and other reasons.
Also the set aside program is still there just not an incentive anymore for
the farmer. You will see Clinton continue to give wheat away and the
government is very much in farming. Look at the cotton 1-2-3 step program
just pasted then you'll see.
>> and the server weather patterns hopefully
>> prices will be higher in the future. I use options to protect and reduce
>> the inherent time premiums buying so far out.
>
>Paying all the time premium plus the carrying charge, wow that's a lot
>of stuff to overcome.
Repeating previous post here
Already covered this in the above.
>> Been my experience grain
>> markets bottom before their supposed to, the norm will be harvest time.
>> This not a recommendation to anybody but this is a trading list and just
>> another idea only. Requires patience and capital and the rule is nobody
>> knows what cheap is only the market and it ain't saying.... *S*. I'm just
>> going in the grain business joining the farmer but without a farm and all
>> the work he has to do as well.
>
>
>> This same idea applies to meat because of
>> cheap feed but will be shorter has more volatility and timing has to be
>> more precise.
>
>Nice idea, but the reality is that they are feeding the cheap corn
>(trying to vertically integrate) which is creating record heavy carcass
>weights. Stated differently, the tonnage of cattle being slaughtered is
>Way up. Since the cattle market has a premium in the differed months,
>you have the same problem. They feed the cheap corn longer in hopes of
>higher prices, which floods the market.
>
>Kevin
>
I think this is what I was saying cheap grain leads to cheap meat, pleasse
always has always will,
the cycle is shorter and its harder to time. I said think of grains bottom
as a curve here it will be a v
and harsh in meats.
Kevin I already took positions in corn, oats, and beans, past tense. So now
you can watch me be wrong but until then just watch me most everybody does
everytime I do this as they did in 94. Yes it is a very nice story this
time you watch next time maybe you can do it to.
Robert.
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