# Buying agricultural commodities



## GreatPig (6 June 2006)

At the end of this article  about Jim Rogers, he talks about buying agricultural commodities (as opposed to metals).

Other than with futures (which I gather are fairly short-term), how does one go about buy agricultural commodities for the longer term?

This means things like wheat, cotton, sugar, etc.

Cheers,
GP


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## wayneL (6 June 2006)

GreatPig said:
			
		

> At the end of this article  about Jim Rogers, he talks about buying agricultural commodities (as opposed to metals).
> 
> Other than with futures (which I gather are fairly short-term), how does one go about buy agricultural commodities for the longer term?
> 
> ...




Hey GP

Unless you want to build a very big shed, futures are the way to go. There are stocks that deal in these commodities of course, but these expose you to other factores apart from the commodity price itself.

Futures need not be short term, there are long dated contracts available. Conversly, when expiry approaches, you can just roll them to another expiry.


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## GreatPig (6 June 2006)

Thanks, Wayne.

Think I'll skip on the big shed , but I really need to start reading up on futures again, and stock derivative products too. I did study futures quite a bit many years ago, but didn't have enough money then to do anything about it.

Cheers,
GP


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## RichKid (6 June 2006)

GreatPig said:
			
		

> At the end of this article  about Jim Rogers, he talks about buying agricultural commodities (as opposed to metals).
> 
> Other than with futures (which I gather are fairly short-term), how does one go about buy agricultural commodities for the longer term?
> 
> ...




I've been thinking along the same lines, see the ASX site for a limited number of agricultural futures and options (mainly directed at producers- illiquid for us?). Not sure which futures are the most liquid and most accessible for mug retail punters, I'd prefer to trade using a local account with local $$$'s. Maybe CFD's?

So which soft commodities are the most promising atm? I've been meaning to get some historical charts to see what the cyclical movements are long term. In metals for example, they say that Zinc leaves its run to the last. Wonder if soft commodities take over when metals correct? Cotton price seemed to be picking up. Time for some charts I say!

Read Stanley Kroll's 'Futures Trading Strategy' for some simple observations on the more popular markets.


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## wayneL (6 June 2006)

RichKid said:
			
		

> Time for some charts I say!




Commodities Charts (spot month) here This is on my site in a more convenient format (IMO) 

Forward months available from FutureSource 

Option IV's Here 

Cheers


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## michael_selway (6 June 2006)

GreatPig said:
			
		

> At the end of this article  about Jim Rogers, he talks about buying agricultural commodities (as opposed to metals).
> 
> Other than with futures (which I gather are fairly short-term), how does one go about buy agricultural commodities for the longer term?
> 
> ...




Wheat - AWB, ABB, GNC
Cotton - QCH, NAM
Sugar - CSR

can anyoen add to that list?

thx

MS

http://www.washingtonpost.com/wp-dyn/content/article/2006/05/19/AR2006051900126.html


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## clowboy (6 June 2006)

I went to a seminar the other night and it was metioned that Barclay's have a long soft commodites managed fund (futures) but as of yet I have had trouble locating it or anything about it.

Anyone know of it or anything similar?

Thanx


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## wayneL (7 June 2006)

wayneL said:
			
		

> Commodities Charts (spot month) here This is on my site in a more convenient format (IMO)
> 
> Forward months available from FutureSource
> 
> ...




I also have historical continuous charts, some going back to 1979. Just ask for any you want posted


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## RichKid (7 June 2006)

wayneL said:
			
		

> I also have historical continuous charts, some going back to 1979. Just ask for any you want posted




Thanks Wayne, how about these three:
Cotton, Wheat and Sugar (following on from previous posts) seem to be best represented on the ASX. I wonder if any co's are directly exposed to Soy Beans or Orange Juice futures? 

The problem as I see it for me is which instrument to use since I don't trade futures. Do you plan to open a futures trdg ac GP? Otherwise it'll probably be via a proxy such as an ASX listed stock, such as those mentioned by Michael. Once we know which markets and instruments to target we can research it to death and come up with a strategy.

If you could post all three on one chart Wayne that'll be great (ie to see relative performance) otherwise anyway you can. I plan to compare the commodity prices to the stocks to see if there's any relationship. Not sure if they run in a similar manner to oil and gold stocks when poo and pog are going up.

btw Michael, sugar prices appear to affect Coca Cola but I don't think it's such a big element in the stock price.

The following came up on ASX via a basic co info search:

Sugar- MSF, CSR
Wheat/Grain- TAN, AWB, ABB
Cotton- NAM, QCH, TAN, AFF


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## wayneL (7 June 2006)

Ok these are continuous spliced charts i.e. they are actual prices traded without back adjusting.

Nick, if you read this, is this what we want to be looking at? Not backadjusted?

MONTHLY BARS


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## RichKid (7 June 2006)

Thanks for the charts Wayne, these all seem to have just moved away from their bases, some retests of those support areas seem to be occuring, most are in the low to mid range areas of the price cycles. I wish there were longer term charts going back 40 yrs or so but I'm not sure if the different circumstances in those early years would affect things. Eitherway it shows that most of the commodities seem to run together as the metails started their runs a few years ago too.

That sugar chart (retesting breakout from base/triangle, w4 correction?) looks particularly sweet!


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## RichKid (7 June 2006)

GreatPig said:
			
		

> At the end of this article  about Jim Rogers, he talks about buying agricultural commodities (as opposed to metals).
> 
> Other than with futures (which I gather are fairly short-term), how does one go about buy agricultural commodities for the longer term?
> 
> ...




Thanks for the article GP, good to get in ahead of future euphoria with these things. Maybe ride a few wave 3's if we can.


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## phoenixrising (8 June 2006)

Interesting that jim says no worldwide drought atm. I guess Oz doesn't qualify as worldwide. 62% of NSW is n drought for the 4th yr running inc most of the commodity growing areas.

The thing with the likes of AWB, GNC,ABB is the local issues affecting the stock values as opposed to say wheat being traded on CBOT as futures.
From Chicago point of view as long as most growing countries are ok (US midwest, Canada, Oz overall, parts of Europe) and there are markets to sell to, then the market will move along. Places like France don't count as they have 30 acre heavily subsidised wheat fields that don't even qualify as hobby farms here, hindering free trade to our much more efficient farms.

Grain growing here is much more deversified now than 20 or 30 yrs ago. The old sheep and wheat farm is now sheep and grain farm, which may grow barley,oats, sorghum, chickpeas, triticale and a host of others.

My point is AWB mostly markets wheat, but may cross to other grains as could ABB (barley board) and GNC (grain handling) also.
To get purity of the commodity, trade in futures is the way to go and dilute local issues imho

Cheers


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## mit (9 June 2006)

cmc has commodity CFDs as well. It has most of the usual suspects including Pork Bellies which always cracks me up and makes me think of American Sit-Coms.

MIT


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## RichKid (20 June 2006)

Bingo!! CSR is said to be correlated to a sugar contract (NY #11, see Wayne's chart above, looks like the same one), I was watching it as a normal share trade for exposure to ethanol bandwagon etc but now will look even more closely as a proxy for sugar futures. I need to compare charts first to make sure Amro's has got it right. The issue here is that other parts of the business may slow so much that the charts go out of sync even if the sugar futures prices rise. Buy in gloom sell in doom? Thanks to Noirua for mentioning this article in the CSR thread: 



> CSR's prospects hit
> Anthony Marx
> 
> June 19, 2006 http://thecouriermail.news.com.au/story/0,20797,19509912-3122,00.html
> ...


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## RichKid (20 June 2006)

Here are the relevant charts for sugar v CSR, I'm not sure if I've got the correct contract but it doesn't really matter as we just need a rough idea, I wish I had more data for the earlier years for sugar but egoli pro charts doesn't have it in the free version, eitherway this should be fine, it appears the relationship is only close enough for medium to long term trading or investing rather than day to day trading as some periods are less correlated than others.

I think I will just trade the EW patterns in CSR with the exposure to the sugar contract in mind.

btw, can anyone explain that big drop in sugar in late 2003? Or is it just faulty data?


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## RichKid (20 June 2006)

RichKid said:
			
		

> .......it appears the relationship is only close enough for medium to long term trading or investing rather than day to day trading as some periods are less correlated than others.........




I may be wrong on that, here's the daily comparison for the recent period.


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