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<DIV><FONT color=#000000 size=2>Sent this message last night but as I had not
updated my email address it did not go through....</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT face=Arial size=2><B>-----Original Message-----</B><BR><B>From:
</B>Anthony Denis Cattani <<A
href="mailto:dcattani@xxxxxxxxxxxxxx";>dcattani@xxxxxxxxxxxxxx</A>><BR><B>To:
</B>Realtraders <<A
href="mailto:realtraders@xxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxx</A>><BR><B>Date:
</B>02 December, 1998 10:14 PM<BR><B>Subject: </B>The Beans<BR><BR></DIV></FONT>
<DIV><FONT color=#000000 size=2>Hi there All:</FONT></DIV>
<DIV><FONT color=#000000 size=2>Although I read a lot of the posts to this list,
I very seldom have a chance to contribute. I see there was a post this a.m.
about the bean market.</FONT></DIV>
<DIV><FONT color=#000000 size=2>As an oilseed trader, I would like to add my two
cents.....maybe three...</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2>This rally in the oilseeds...from the
bottom....was in part engineered by the funds. Shortly after the beans bottomed,
a very large European fund established a very large soybean position that seemed
to start the market off into rally mode. Along the way the North American fund
traders have been in and out of the market a couple of times. As I trade mainly
Canola, and since it is a very commercial market, I will refer to it's chart.
</FONT></DIV>
<DIV><FONT color=#000000 size=2>The first leg up was bought, and driven heavily
by the funds. The correction from this move was swift and rapid and panicked
most of the longs into selling near the lows with a loss.</FONT></DIV>
<DIV><FONT color=#000000 size=2>The second leg up saw a little less fund
involvement and most of the longs went into very strong hands. </FONT></DIV>
<DIV><FONT color=#000000 size=2>The third leg up again saw heavy fund buying
with large additions to the longs. Most of these positions were bought
aggressively.</FONT></DIV>
<DIV><FONT color=#000000 size=2>Then came the Thanksgiving Holiday. Richard
Denis' first love is beans. Coming off a very profitable yen position where it
is felt he made close to 100 mill., it is my opinion that he was back to his old
tricks by buying heavily in the bean market the day after Thanksgiving. The set
up was perfect. A lot of the trade was away, the market was thin, the stops were
waiting. Good old shoot from the hip trading can still work, and here we are,
moving on up.....</FONT></DIV>
<DIV><FONT color=#000000 size=2>Will it hold? My guess is maybe for the very
short term, maybe if the weather in South America cooperates. In the mid to
longer term, no. The fundamentals are not there. The weekly charts, at least in
Canola will break the accelerating support line next week. If the Canola market,
which is already overpriced, starts to break, it will take the bean oil, and
then the beans with it. Oh, since most of you do not watch the canola market, it
quite often leads the beans. Why, because it's a commercial market, without the
extra 'noise' that the bean trade has.</FONT></DIV>
<DIV><FONT size=2>It is way to early for a weather market to develop in S.
America. If it stays dry the market will still be vulnerable to manipulation to
the upside by the funds. But, they are playing a dangerous game. The first sign
of a good general rain and look out below. As an added fact, isn't it
interesting that for the past week we have not been able to get reliable weather
reports out of Brazil? Just a coincidence you say......</FONT></DIV>
<DIV><FONT size=2>The long term monthly charts of Canola still point to one more
leg down. In probability it will be a nice sized drop of 50 to 80 dollars. I am
expecting this to begin early next year. The only thing that will negate the
scenario is major weather problems in S. America. The bean oil and the beans
will follow. IF and WHEN that leg in complete, then we will be in a very long
buy and hold situation. Starting in late 1999 or early 2000 inflation will start
to slowly creep back in. This will be the ride that most of us have waited for.
It will rival the commodities run of the seventies. I expect beans in the high
upper teens, crude oil in the 50 to 80 dollar area, and God forbid, our mail
boxes flooded with hundreds of letters about why we should all buy gold.
</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>That is the way that I see it.</FONT></DIV>
<DIV><FONT size=2>Disclaimer: These are my own opinions, and are not put forward
to suggest or recommend positions in any of the markets mentioned</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>As a post script.....I know that this has been brought up many
times in the past, but I am looking for a reliable end of day data provider. I
am adding software and I do not want to interfere with my on line systems. I
have checked out most of the providers and am still in a fog. The best deal I
came across was the options software that included a full year of data with the
software for $595.00 </FONT></DIV>
<DIV><FONT size=2>Any and all suggestions will be appreciated. I used to
download TechTools, but since they changed their format I find the set up not my
liking.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Profitable trading all.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Anthony Denis Cattani.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2></FONT> </DIV></BODY></HTML>
</x-html>From ???@??? Thu Dec 03 15:19:53 1998
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Date: Thu, 3 Dec 1998 15:19:10 -0700
Reply-To: brente@xxxxxxxxxxxx
Sender: owner-realtraders@xxxxxxxxxxxxxx
From: "BrentinUtahsDixie" <brente@xxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: Re: contango/backwardation
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Pete,
This is getting close to splitting a hair but how do you get your
information on Austrian Economics? Do you go there and personally collect
data and measure it? I don't think so. You probably rely on the news like
most all of us. I think that you are talking about how you utilize
information that is most likely obtained from the news. Economics is simply
the amalgamation of all input and output of an economic system and news is
simply the reflection of that. Economic forces are what move most everything
but they are difficult to fully understand and conceptualize. In 1980
everyone's idea of the economy didn't tell them that for the next 20 years a
bull market was going to ensue or everybody and especially the economists
would be richer than Bill Gates. My point is that no one can possibly know
all fundament input whether it comes from the news, the boardroom, or the
local tavern. And one key missing piece of information can negate all the
other input. For example a dock strike can cause a price rally even though a
large supply of something is produced and expected.
Brent
-----Original Message-----
From: Peter [ KKD ] <derivatives@xxxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Thursday, December 03, 1998 12:49 PM
Subject: Re: contango/backwardation
>Brent
> when I referr to fundamentals, Im not talking about news events (ie
your
>saddam comment), but rather things like "mainstrean econmics" vs Austrian
>economics, capital flows, intermarket integration & correlations, being
>aware of how portfolio mangers utilise CAPM & hence their capital
allocation
>to different asset sectors in general, what EMU integration means for
>fiscal/monetary policy, & why it cant really work, hence what it implies
for
>US/EU risk premiums, hence ER, & int rates differentials. etc etc, etc etc
> FUNNYmentals encompase a much wider scope than you mentioned
>Peter
>
>-----Original Message-----
>From: BrentinUtahsDixie <brente@xxxxxxxxxxxx>
>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>Date: Friday, 4 December 1998 6:23
>Subject: Re: contango/backwardation
>
>
>>Pete, although I agree with the sprit of your statement that it is
>important
>>to understand fundamentals, I don't believe that anyone understands
>>fundamentals completly. For example you virtually have to be all knowing
to
>>know that Sadam ate something that gave him indigestion and kicks out some
>>UN guys or something. I followed a Copper backwardation for a while and it
>>was just market manipulation as near as I could tell. Surprise, there was
>>more Copper in some wharehouse that they didn't count. You can't hardly
>>believe a word of the news. So what else is new.
>>
>>Brent
>>
>>-----Original Message-----
>>From: Peter [ KKD ] <derivatives@xxxxxxxxxxxxxx>
>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>>Date: Thursday, December 03, 1998 9:35 AM
>>Subject: Re: contango/backwardation
>>
>>
>>>To be a trader worth your salt, you need to understand fundamentals
>>>completely, but then when it comes to trading you need to forget about it
>>>totally. This however dosnt detract from its importance......... case in
>>>point LTCM Euro positions
>>>Peter
>>>
>>>-----Original Message-----
>>>From: BrentinUtahsDixie <brente@xxxxxxxxxxxx>
>>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>>>Date: Friday, 4 December 1998 3:20
>>>Subject: Re: contango/backwardation
>>>
>>>
>>>>I'll tell you what contango/backwardation means to me, it means that a
>>hole
>>>>bunch of fundamentalist traders are going to be taken to the cleaners.
>>Just
>>>>another good reason to trade 99% technically.
>>>>
>>>>Brent
>>>>
>>>>-----Original Message-----
>>>>From: I4Lothian@xxxxxxx <I4Lothian@xxxxxxx>
>>>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>>>>Date: Thursday, December 03, 1998 8:19 AM
>>>>Subject: Re: contango/backwardation
>>>>
>>>>
>>>>>You normally hear contango and backwardation in relation to New York
>>>>>contracts. In Chicago the terms I hear used are a "Normal" market (one
>>>>with
>>>>>carrying charges ), and an "Inverted" market (one with nearby prices
>>>higher
>>>>>than deferred prices). Just different terms to describe the same
thing.
>>>>>
>>>>>An example of a normal market to an extreme is the Lean Hog market.
>>There
>>>>is
>>>>>a glut of available nearby supply, not much capability to store
product,
>>>>and
>>>>>weaker demand than anticipated when the farrowings were planned.
>>>>>
>>>>>Given our glut of supply in most all commodities, and weak worldwide
>>>>demand,
>>>>>there are not any significant inverted markets I can see right now.
>>>>However,
>>>>>the corn market of 1996 would be a good example. Nearby prices gained
>>>>>dramatically on deferred prices.
>>>>>
>>>>>Sometimes markets will go inverted when there is a shortage of the
>>>>commodity,
>>>>>like the 1996 corn market. Other times you will see an inverted market
>>in
>>>>the
>>>>>first couple of months, despite a glut of supply. This will occur
>>because
>>>>the
>>>>>owners of the commodity, like farmers holding and storing soybeans, are
>>>>>waiting for higher prices in the future to sell their crop. In the
>>>>meantime,
>>>>>processors of soybeans need to buy them to fulfill their nearby meal
and
>>>>oil
>>>>>contracts. This creates a strong basis, which supports the nearby
price
>>>>due
>>>>>to the relationship of the cash prices in the country to delivery
values
>>>of
>>>>>the futures contracts.
>>>>>
>>>>>Regards,
>>>>>
>>>>>John J. Lothian
>>>>>
>>>>>Disclosure: Futures trading involves financial risk, lots of it!
>>>>>
>>>>>
>>>>>In a message dated 12/3/98 7:53:09 AM Central Standard Time,
>>>>stansan@xxxxxxx
>>>>>writes:
>>>>>
>>>>><< Ketayun:
>>>>> This is my understanding of these terms.
>>>>> In commodities, e.g. oil, cocoa, etc., the contracts for
>>>>> future delivery carry a higher price than contracts for
>>>>> near term delivery.other factors being equal.
>>>>> So a contract for oil expiring in 6 months would usually
>>>>> cost more than the same contract expiring in 30 days.
>>>>> This is due to several factors one of which is the carrying
>>>>> cost. This normal situation is called "Contango" but I'm
>>>>> not sure the origin of the term.
>>>>>
>>>>> However, a year ago long-delivery oil was priced below the
>>>>> short-delivery oil and this unusual situation was referred
>>>>> to as backwardation. I believe this term is appropriate
>>>>> because the relationship of long term to short term is
>>>>> backwards.
>>>>>
>>>>> I hope the RT'ers who deal in commodities can give
>>>>> a better explanation.
>>>>> BTW at the time of the backwardation in oil occurred
>>>>> it was explained partly as due to temporary loss of
>>>>> refinery capacity and was a near term factor only.
>>>>>
>>>>> Regards,
>>>>> Stan R. >>
>>>>>
>>>>
>>>>
>>>
>>>
>>
>>
>
>
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