# Commodities - more than metals/oil



## wayneL (31 October 2006)

How about softs/grains.

Sugar has had a stellar run last year and and equally tradeable sell-off this year. (Futures are just as easy to short as to long.)

The grains are the latest to go on a bullish little romp. (while most of the tradeable metals have been stagnant) i.e Wheat, Corn and the Soybean complex

Check out this bullish article

http://www.bloomberg.com/apps/news?pid=20601087&sid=aN6AH00z2lbQ&refer=home



> Wheat Prices May Reach Record, Hurting Kellogg, Helping Funds
> 
> By Tony C. Dreibus and Jeff Wilson
> 
> ...


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## scsl (31 October 2006)

wayneL said:
			
		

> How about softs/grains.
> 
> Sugar has had a stellar run last year and and equally tradeable sell-off this year. (Futures are just as easy to short as to long.)
> 
> ...



WOW! Are you planning to get in on some of these gains?

You see, I'm a fan of zinc, and seeing as the price continues to rise, you only need to buy stocks like ZFX and CBH to do very well. So with wheat set to rise, surely companies that have exposure have got to benefit? AWB springs to mind, but with all the negative media surrounding it, I'm not so keen. So what would be worth putting on the watchlist?

As long as global warming continues to worsen, I think global wheat production could be in decline from here on, and so it would make sense to hold some wheat/grain companies that will benefit from higher prices...


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## wayneL (31 October 2006)

scsl said:
			
		

> WOW! Are you planning to get in on some of these gains?
> 
> You see, I'm a fan of zinc, and seeing as the price continues to rise, you only need to buy stocks like ZFX and CBH to do very well. So with wheat set to rise, surely companies that have exposure have got to benefit? AWB springs to mind, but with all the negative media surrounding it, I'm not so keen. So what would be worth putting on the watchlist?
> 
> As long as global warming continues to worsen, I think global wheat production could be in decline from here on, and so it would make sense to hold some wheat/grain companies that will benefit from higher prices...




I trade them directly via futures, so don't really know what companies would benefit....AWB could actually suffer as a result. Unless Aus has a bumper crop but drought everywhere else.

Here is something topical - AWB pleads for farmers wheat


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## wayneL (3 November 2006)

Dec Corn just went limit up... again!


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## Rafa (3 November 2006)

Yup, once GOLD fails as a currency...
then is Grain...

(i mean, whats the point of all the gold in the world if you haven't got food!)




But by then, well... 
(damit, where's that animation of the crap hitting the fan!!!)


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## DB008 (10 November 2006)

yeah, l agree with WayneL. l sold my corn warrant around the $2.60 mark a few weeks ago and now it's around the $3.50. Aren't l an idiot?!


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## Smurf1976 (11 November 2006)

One point to note is that with the increasing worldwide use of ethanol as a fuel, agricultural commodities are increasingly influenced by the oil price. 

If oil goes to $200, for example, then there would be an awful lot more demand for ethanol. Once enough plants get built to supply it (ethanol productions isn't particularly difficult - building a plant is well within the abilities of junior companies) then demand for the feedstock booms. If oil crashes to $10 then existing ethanol demand for agricultural feedstock disappears literally overnight. Hence agricultural commodities are increasingly tied to the oil pice. 

Anyone have a list of which companies on the ASX benefit from rising agricultural commodity prices? Plant based agricultural commodities that is - pigs and cows aren't useful inputs for ethanol!


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## wayneL (11 November 2006)

Smurf1976 said:
			
		

> One point to note is that with the increasing worldwide use of ethanol as a fuel, agricultural commodities are increasingly influenced by the oil price.
> 
> If oil goes to $200, for example, then there would be an awful lot more demand for ethanol. Once enough plants get built to supply it (ethanol productions isn't particularly difficult - building a plant is well within the abilities of junior companies) then demand for the feedstock booms. If oil crashes to $10 then existing ethanol demand for agricultural feedstock disappears literally overnight. Hence agricultural commodities are increasingly tied to the oil pice.
> 
> Anyone have a list of which companies on the ASX benefit from rising agricultural commodity prices? Plant based agricultural commodities that is - pigs and cows aren't useful inputs for ethanol!




CSR would be one (sugar is also becoming an energy market)


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## wayneL (17 November 2006)

Zinc sux

OJ rocks   Prodding at all time highs

Chart


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## andrewkmz (17 November 2006)

Hi, all

Just read this article http://www.stockinterview.com/News/11162006/Fuller-super-cycle.html. Thought you may be interested.

It talks about Commodities Super cycle and uranium bull as well.

andrew


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## andrewkmz (18 November 2006)

here is another http://www.kitco.com/ind/vaughn/nov142006.html

have a nice weekend

andrew


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## BREND (5 January 2007)

I think Lead is a high demand, and yet forgotten base metal.

*Mod Note-  Please provide more of an explanation here on ASF, if you continue to post in this style I will have to take further remedial action.*


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## wayneL (12 January 2007)

March Corn going limit up   

....and oil 52.20 FFS. We'll be in the 40's before you can say Jack Robinson  

Dubya will blow up a pipeline himself if this keeps up! lol


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## theasxgorilla (12 January 2007)

wayneL said:
			
		

> Dubya will blow up a pipeline himself if this keeps up! lol




...or turn on the _top secret_  weather machine for another hurricane in the Gulf of Mexico.


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## wayneL (13 January 2007)

corn just opened  limit up on a bullish report.

another 2.5c and soy will lock too.

  

<edit> soy locks at 50c not 30c as I thought


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## wayneL (13 January 2007)

Well soy neeeearly hit its limit of 50c, corn was locked all day and wheat hit it's limiy and backed off a couple of cents.

You should have seen the number of contracts sitting on the bid (which was at the limit price) trying to pick up some dummies selling at the bid (not many lol)....Nearly 70,000 CONTRACTS at one stage.

Looks like we might be paynig more for popcorn in the near future


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## wayneL (16 January 2007)

Corn is already limit up again today on ECBOT.

Looks like taco shells are going to get expensive


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## wayneL (24 January 2007)

Nice night on the commods folks.

Commodities might be more than metals and oil, but the same put in a stellar performance, particularly oil/energy.

Grains making overtures for another up leg also... it might be wheats turn for some action FWIW


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## dodgers (12 February 2007)

hi wayneL

just wondering whats on your watchlist atm... I'm thinking going long sugar soon

also what software are you using to chart these

cheers
dodgers


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## CanOz (14 April 2007)

This ones on my watchlist now.


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## wayneL (15 April 2007)

CanOz said:


> This ones on my watchlist now.



A textbook trangle trend continuation pattern set up there in cocoa.

If it breaks out I want to be on it as well to pay for the organic cocoa missus buys  

...maybe i'll take delivery of a contract, 10 tonnes should keep us going for a while.


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## CanOz (15 April 2007)

wayneL said:


> A textbook trangle trend continuation pattern set up there in cocoa.
> 
> If it breaks out I want to be on it as well to pay for the organic cocoa missus buys
> 
> ...maybe i'll take delivery of a contract, 10 tonnes should keep us going for a while.




Yeah, its a big contract, i think there is a london mini...i don't have it open and the moment.

Cheers,


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## wayneL (18 April 2007)

CanOz said:


> This ones on my watchlist now.



Break from tri - 

...and news article from yesterday



> DOW JONES NEWSWIRES
> 
> 
> 
> ...


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## CanOz (18 April 2007)

Nice breakout. Unfortunatly i wasn't in it. 

By the time i saw it moving it wasn't worth it with the spread. I think i'm better off trading future contracts and not the CFD's, its just to difficult to find a good entry, then even harder to place a tight stop. Do you use an Australian broker or US Wayne?

Cheers,


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## wayneL (18 April 2007)

CanOz said:


> Nice breakout. Unfortunatly i wasn't in it.
> 
> By the time i saw it moving it wasn't worth it with the spread. I think i'm better off trading future contracts and not the CFD's, its just to difficult to find a good entry, then even harder to place a tight stop. Do you use an Australian broker or US Wayne?
> 
> Cheers,




IB for electronic contracts. 

orionfutures.com for pits/options

but check out www.xpresstrade.com as well


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## CitySlicker (19 April 2007)

CanOz said:


> Nice breakout. Unfortunatly i wasn't in it.
> 
> By the time i saw it moving it wasn't worth it with the spread. I think i'm better off trading future contracts and not the CFD's, its just to difficult to find a good entry, then even harder to place a tight stop. Do you use an Australian broker or US Wayne?
> 
> Cheers,




So, why would you use futures contracts over CFDs? Not criticising, just curious, because I use CFDs and have never traded futures.

Futures have always been in the "unknown - too hard" basket for me. 

Cheers,
CitySlicker


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## wayneL (19 April 2007)

CitySlicker said:


> So, why would you use futures contracts over CFDs? Not criticising, just curious, because I use CFDs and have never traded futures.
> 
> Futures have always been in the "unknown - too hard" basket for me.
> 
> ...



Counterparty risk is the main one for me. Probably less contest risk(bid/ask spread + commish) as well (without fully knowing the contest risk for CFDs on commods)


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## wayneL (20 April 2007)

Cocoa........such a beautiful setup, such an ugly result. S.A.R. lol


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## CanOz (13 May 2007)

You ever trade these swings on Cotton Wayne...looking like a good entry for a long soon....does this ever get affected by retail spending?

Cheers,


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## CanOz (13 May 2007)

Coffee looking bullish again too IMO.


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## UMike (13 May 2007)

CanOz said:


> You ever trade these swings on Cotton Wayne...looking like a good entry for a long soon....does this ever get affected by retail spending?
> 
> Cheers,



If so then by those charts in a few days time would be a great time to get in.


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## CanOz (14 May 2007)

Really considering an entry here....even if its short term until this trend is busted...Wayne, really appreciate your thoughts on coffee...and i don't mean if you like it black! LOL!

Cheers,


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## CanOz (28 May 2007)

Got in on this Triangle at 339.


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## >Apocalypto< (28 May 2007)

CanOz said:


> Got in on this Triangle at 339.




Can that looks great you taking that long?


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## CanOz (28 May 2007)

Trade_It said:


> Can that looks great you taking that long?




Yeah, nice low risk setup, i love triangles

Cheers,


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## wayneL (28 May 2007)

CanOz said:


> Yeah, nice low risk setup, i love triangles
> 
> Cheers,



I took that trade as well. Good luck to us.


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## yonnie (1 June 2007)

those futures are only so volatile.....

look at a share market index: if it moves 2% in a day its a real cracker.

why would the futures be so volatile?


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## wayneL (1 June 2007)

yonnie said:


> those futures are only so volatile.....
> 
> look at a share market index: if it moves 2% in a day its a real cracker.
> 
> why would the futures be so volatile?



I'm not clear what your question is yonnie?

Futures are no more volatile than stocks... in many cases far less so.


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## yonnie (2 June 2007)

yes thats exactly what I mean wayne.

they act like stocks and often not the slow ones, but certainly not like a stock market index where you really can put the leverage on.

BTW I read that futures are only allowed to rise or fall a certain percentage per day.
Now suppose I have a stop loss order to sell my position that turns into a market order when hit with IB for a future.
The market opens for that day and almost straight away the maximum fall is hit again and the market  closes for that day. In the meantime price went past my stop price.
Do I sell or do I have no control over that sale and the max might be hit in the next 5 days and I`m broke?


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## yonnie (3 June 2007)

wouldn`t it be very risky not being to get out of your contract and losing your shirt or skirt?

I see there is now a possibility to trade the DJ AIG Commodity Index that consists of 19 physical commodities.
Haven`t really looked into it properly but will probably reflect the changes in a share market index and would be good for long-term trades with maximum leverage.


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## wayneL (4 June 2007)

yonnie said:


> BTW I read that futures are only allowed to rise or fall a certain percentage per day.
> Now suppose I have a stop loss order to sell my position that turns into a market order when hit with IB for a future.
> The market opens for that day and almost straight away the maximum fall is hit again and the market  closes for that day. In the meantime price went past my stop price.
> Do I sell or do I have no control over that sale and the max might be hit in the next 5 days and I`m broke?



Yes.

It's called a locked limit move and unless someone is willing to trade at the limit price, you're stuck in the trade. However in reality, this is no different to an opening gap on a stock. (Which can be, and often is, much larger than lock limit moves on futures. I avoided futures for years because of this fear, but having seen some of the opening gaps on stocks, it's not a rational one.

Where the difference lies is in the use of leverage. Where someone is silly enough to gear themselves so highly where this scenario risks their ruin... well, they're bonkers.

I ALWAYS take this into account when placing a trade; ie what is the underlying face value of what I'm trading compared to account size (as well as the current and possible volatility)

If there is a price shock against my position, how will that affect my account? This is something I consider imperative to consider when trading anything, whether it stocks, futures or options. The leverage is available, but it does not mean I have to use it.

Sensible position sizing rules... always!!!!


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## reece55 (4 June 2007)

wayneL said:


> Yes.
> 
> Where the difference lies is in the use of leverage. Where someone is silly enough to gear themselves so highly where this scenario risks their ruin... well, they're bonkers.
> 
> ...




Couldn't agree more with you here Wayne. 

Personally, I don't trade commods, but in any leverage position, you have to be aware of the potential for a price shock - review what the greatest move was in the chosen market you are in and see how that would affect your capital. This obviously is crucial for any overnight positions. Personally, any position held overnight for me in a leveraged position has a guaranteed stop - you may pay a bit more on the spread or commish, but I believe it is money well spent.... Plus, then I know from the outset what my maximum value at risk is at any given time.....

Cheers


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## CanOz (5 June 2007)

Sugar turned rather comically into a joke really didn't?


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## >Apocalypto< (5 June 2007)

CanOz said:


> Sugar turned rather comically into a joke really didn't?




Welcome to futures trading Can! You have to keep you wits about you, things can change damn quick on the short term!

Now how is your system going?

Can, I am not trying to be smart, but I noticed sugar was making lower highs on that chart before your entry. Did you check the  monthly and weekly direction to know type of market you were in? Had it formed a band or V before your entry + broken any major resistance lines?


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## CanOz (5 June 2007)

Well it was clearly a counter trend position, but low risk, so worth a try. Very small loss.

Cheers,


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## wayneL (5 June 2007)

CanOz said:


> Sugar turned rather comically into a joke really didn't?






Trade_It said:


> Welcome to futures trading Can! You have to keep you wits about you, things can change damn quick on the short term!






CanOz said:


> Well it was clearly a counter trend position, *but low risk, so worth a try. Very small loss.
> *
> Cheers,



Yup! But it could have been the the bend that ended the trend. Worth a shot.

_Que sera sera_


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## >Apocalypto< (5 June 2007)

CanOz said:


> Well it was clearly a counter trend position, but low risk, so worth a try. Very small loss.
> 
> Cheers,




well good on u for taking it


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## nizar (14 June 2007)

Hi guys.

What broker do you use to trade commodities?
Any thoughts/opinions?

Does longterm trends work for commodities?
What time frame do you guys trade?

Thanks.


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## wayneL (14 June 2007)

I use www.interactivebrokers.com for most contracts as most commods can be traded electronically. I use www.orionfutures.com for pit contracts and most options.

I notice TI uses www.xpresstrade.com who have a pretty fair reputation.

The advantage with IB is that you can keep your funds in AUD which lessens the currency risk.

Trends? YUP!

No problems trading either direction either. Shorting is no problem.


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## lesm (14 June 2007)

nizar,

Have a look at Interactive Brokers (http://www.interactivebrokers.com/en/main.php).


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## lesm (14 June 2007)

CanOz said:


> Sugar turned rather comically into a joke really didn't?



Can,

Could have turned into molasses and that may have been a sticky situation.

Wayne,

Looks like we crossed over the top of each other.


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## nizar (14 June 2007)

Wayne/Lesm/Others,

Can you guys please give me a quick run down or how commodities work?

How about in terms of minimum requirements to trade?

(I understand for forex 1 lot = $100,000)

For commodity futures, what does 1 contract mean in $$terms? 

Anything else i should know or anywhere i can go to get more info?

LOL im a grass roots level beginner so yeh....

Many thanks.


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## wayneL (14 June 2007)

nizar said:


> Wayne/Lesm/Others,
> 
> Can you guys please give me a quick run down or how commodities work?
> 
> ...



Radge has a commodities course which is well worth doing. It covers the nitty gritty on the different contracts.

I'm glad you're thinking of contracts in face value terms rather than what most do which is in terms of margin.

Each contract will be different and there is a bit of work involved in familiarizing yourself with each contracts underlying size, expiry dates, tick size, trading hours (yep they have different trading hours). I'll post up a few samples.

Mnay brokerages will let you open an account with $5k, but this is seriously a bad move... unless you,re very good at daytrading. Opinions vary on how much you need to start with, but the more the better.


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## wayneL (15 June 2007)

Here is Chicago Board of Trade's Corn contract specs (Their other contracts are there on the left, bet there are other exchanges as well)

http://www.cbot.com/cbot/pub/cont_detail/1,3206,1213+14389,00.html

To get the contract size in $ simple multiply the contact size by the price.

Wheat for eg is 5000 bushels. The current price is around $6.00 a bushel  so $6.00 x 5000 = $30,000 US.

The main exchanges are: (Look for products/contract specs)

Chicago Board of Trade (CBOT) www.cbot.com

Chicago Mercantile Exchange (CME) www.cme.com

New York Metals Exchange (NYMEX/COMEX) www.nymex.com

New York Board of Trade (NYBOT) www.nybot.com

Steep learning curve in front of you. Good luck


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## Seaking (15 June 2007)

Hi 
I have made the first steps toward getting serious about trading futures on a few indexes at this stage, and moving towards commodities down the track. I have been looking into streaming data providers and esignal seems to be the more popular one to feed into Amibroker. Does anyone have a few more suggestions I can check out...


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## nizar (15 June 2007)

wayneL said:


> Here is Chicago Board of Trade's Corn contract specs (Their other contracts are there on the left, bet there are other exchanges as well)
> 
> http://www.cbot.com/cbot/pub/cont_detail/1,3206,1213+14389,00.html
> 
> ...




Thanks Wayne.
I'll be looking into it.

$30k  
So I take it this statement is a lie


> Richard Dennis
> Began with $400 and turned it into a fortune estimated to approach $200 million. Perhaps the best-known futures speculator of our time.




LOL but i guess back in the 70s, $400 is maybe $10k now.... Hmmm....

Wayne how about mini's ?

And what do you think are the main advantages of commodities/futures over stocks?

THanks.


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## wayneL (15 June 2007)

Seaking said:


> Hi
> I have made the first steps toward getting serious about trading futures on a few indexes at this stage, and moving towards commodities down the track. I have been looking into streaming data providers and esignal seems to be the more popular one to feed into Amibroker. Does anyone have a few more suggestions I can check out...



There is no better than esignal, but once you go past trading eminis, all the subscriptions will cost you a fortune. A small impost if you are bigtime, but for the average trader it adds up to a lot.

You can feed IB data into amibroker and it's free if you are a client, and most brokers will give you live snapshot charts. I use the IB feed plus an EOD download which works out very economically.


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## wayneL (15 June 2007)

nizar said:


> Thanks Wayne.
> I'll be looking into it.
> 
> $30k
> ...



Don't forget you trade futures on margin. The margin for wheat at the moment is $1553. So if @rsey, you could start with say $5,000 and build up a multimillion dollar empire. I don't think anyone would suggest that as anything more than a gamble in the intitial stages though.



nizar said:


> Wayne how about mini's ?



Great on Indecies and Oil. But even then SP miniss are ~$75k and crude minis are ~$34k. Thats face value. Margin of course is 3 or 4k



nizar said:


> And what do you think are the main advantages of commodities/futures over stocks?
> 
> THanks.




Here's one guys view http://www.moneyweek.com/file/27973/eight-reasons-commodities-beat-stocks-every-time.html

I would add that I like the non correlated returns. If you are all long in the stock market and Greedscam open his mouth without being asked, your whole portfolio takes a hit. But Corn or Lean Hogs don't give a stuff about Greedscam. You will have longs or shorts in completely uncorrelated markets, and I like that.

I still like stocks though. Stocks you can stick in the bottom drawer. In my view commodities themselves are not "investments". They must be managed unless you're Jim Rogers.


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## nizar (15 June 2007)

wayneL said:


> Here's one guys view http://www.moneyweek.com/file/27973/eight-reasons-commodities-beat-stocks-every-time.html
> 
> I would add that I like the non correlated returns. If you are all long in the stock market and Greedscam open his mouth without being asked, your whole portfolio takes a hit. But Corn or Lean Hogs don't give a stuff about Greedscam. You will have longs or shorts in completely uncorrelated markets, and I like that.
> 
> I still like stocks though. Stocks you can stick in the bottom drawer. In my view commodities themselves are not "investments". They must be managed unless you're Jim Rogers.




Thanks Wayne.

How does margin work?
Do you get paid/have to pay interest just like with CFD indices??


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## wayneL (15 June 2007)

nizar said:


> Thanks Wayne.
> 
> How does margin work?
> Do you get paid/have to pay interest just like with CFD indices??



It works similar to CFD Margin except

a) There is no interest to pay or be paid (though you are usually paid a pittance on your cash balance)

b) Rather than a set percentage, it is calculated using a complicated set of algorithms called SPAN (*S*tandardized *P*ortfolio *AN*alysis of risk) and is essentially  an assessment of the one-day risk for a trader's account. (Margins are available on any brokers site or the exchange sites above)

A quick tutorial on futures margin =>> http://www.devnic.com/tutorials/how_margin_commodity_futures.html


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## Seaking (15 June 2007)

> There is no better than esignal, but once you go past trading eminis, all the subscriptions will cost you a fortune. A small impost if you are bigtime, but for the average trader it adds up to a lot.
> 
> You can feed IB data into amibroker and it's free if you are a client, and most brokers will give you live snapshot charts. I use the IB feed plus an EOD download which works out very economically.




Thanks Wayne. I did look at IB as a broker but decided to stay with brokerone as my system is end of day and they have a desk to work my orders. I use their iress platform for the SPI and enjoy doing some pattern scalping during the day session, but wanted to use amibroker rather than basic iress charts. 
I got a price from esignal last night for the SFE, HangSeng and Singapore and it came to $223US a month. Not too bad for what I want now, but as you said, once you start on the bigger exchanges, it get's a bit exy... 



> Originally Posted by wayneL
> Here's one guys view http://www.moneyweek.com/file/27973/...very-time.html
> 
> I would add that I like the non correlated returns. If you are all long in the stock market and Greedscam open his mouth without being asked, your whole portfolio takes a hit. But Corn or Lean Hogs don't give a stuff about Greedscam. You will have longs or shorts in completely uncorrelated markets, and I like that.
> ...




The above reason is exactly why I am moving in the commodities direction. I'm getting a bit weary of all my open equity positions all moving in unison no matter how hard I try to spread the diversity.


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## CanOz (5 September 2007)

Anyone catch that recent move in Wheat?

Cheers,


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## wayneL (5 September 2007)

CanOz said:


> Anyone catch that recent move in Wheat?
> 
> Cheers,



The totally hilarious thing about this move in wheat, is that all the ex-spurts were expecting this sort of thing in corn. LOL

Instead there is a glut of corn and the whole US wheat crop is dead.


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## CanOz (5 September 2007)

wayneL said:


> The totally hilarious thing about this move in wheat, is that all the ex-spurts were expecting this sort of thing in corn. LOL
> 
> Instead there is a glut of corn and the whole US wheat crop is dead.




LOL! I just came across it while browsing produce....

Could be a short opp!

Might have to short it on the Sim!

Cheers,


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## topcropper (7 September 2007)

wayneL said:


> Instead there is a glut of corn and the whole US wheat crop is dead.




It's got nothing to do with the US wheat crop. It's all to do with the dry in Australia. Over here we were heading for a big crop 6 weeks ago, however no rain in 2 more weeks and we will have a very small crop. Take another 10 million tonnes from world wheat stocks and things are getting grim.

See ya's.


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## wayneL (7 September 2007)

topcropper said:


> It's got nothing to do with the US wheat crop. It's all to do with the dry in Australia. Over here we were heading for a big crop 6 weeks ago, however no rain in 2 more weeks and we will have a very small crop. Take another 10 million tonnes from world wheat stocks and things are getting grim.
> 
> See ya's.



By "over here" I take it you mean the US?

You'll have to get used to our offhand use of hyperbole... isn't it obvious?


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## topcropper (7 September 2007)

Sorry. 

'over here', I mean in Australia.

Australia is driving wheat prices. A month ago it was looking like a 20 million plus crop. Today it is a lot less. In 2 weeks with no rain, it could be similar to last years pitifull crop.

Wheat futures in Chicago are rising or dropping right now on what happens in Australia. A lot of the buying is Aussie wheat farmers buying back their contracts as they can't deliver, they will produce less than they have hedged.

I'm an Aussie wheat grower. 

See ya's.


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## wayneL (7 September 2007)

topcropper said:


> Sorry.
> 
> 'over here', I mean in Australia.
> 
> ...




<hyperbole>Notwithstanding that the entire US wheat crop is dead</hyperbole> 

That's why they're sweating on the Aus. crop. A good crop there and they wouldn't give a toss what's happening here


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## CanOz (9 September 2007)

Sorry to interupt the corn debate, but heres an interesting technical setup in Canola...A reverse H&S just after the last H&S...i'm taking this trade on the IB Sim once that NL is broken.

Cheers,


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## CanOz (9 September 2007)

Wheat debate...sorry.....still got Waynes comments about corn on the brain.


cheers,


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## Temjin (9 September 2007)

An interesting article for grains, titled "The Big Bull Market in Grains",

http://www.marketoracle.co.uk/Article2062.html

An ETF that charts the DJ-AIG Grains Sub-Index

http://www.bloomberg.com/apps/cbuilder?ticker1=AIGG:LN


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## CanOz (16 September 2007)

Breakout confirmed, hang on! Another grain taking off, Canola out of the reverse H&S.

Cheers,


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## Pager (17 September 2007)

I’m interested to start trading commodities, so after some opinion and recommendation of contracts to follow, rather than follow all of them im after a mix of around 5 or 6 markets.

Also want a mix that are uncorrelated to each other to get me up and going, have only been following NYBOT Sugar so far, has good volume and contract size is not huge, would want to add one of the grain contracts, maybe Corn?, but with several contracts which would be best, have been also following Lumber but volume is pretty low so maybe i will cross that of the list.

Any suggestions of a portfolio to watch would be appreciated.

Cheers

Pager


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## wayneL (17 September 2007)

Pager said:


> I’m interested to start trading commodities, so after some opinion and recommendation of contracts to follow, rather than follow all of them im after a mix of around 5 or 6 markets.
> 
> Also want a mix that are uncorrelated to each other to get me up and going, have only been following NYBOT Sugar so far, has good volume and contract size is not huge, would want to add one of the grain contracts, maybe Corn?, but with several contracts which would be best, have been also following Lumber but volume is pretty low so maybe i will cross that of the list.
> 
> ...




A few suggestions to choose from that have reasonable liquidity and not too large.

NYBOT Cocoa CC
NYBOT CT
CBOT mini Gold YG
NYBOT Coffee KC
LIFFE Coffee D
NYMEX Mini Crude QM
NYBOT Sugar SB
LIFFE Sugar W
CBOT Corn ZC
EUREX Bund GBL
Maybe CBOT Wheat ZW
Maybe CBOT Beans ZS
Maybe CBOT T-Notes ZN

Livestock can be OK but illiquid on Globex at this point

A few choices there anyway.

Cheers


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## Pager (17 September 2007)

Thanks Wayne

Much appreciated


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## wayneL (18 September 2007)

NYBOT Coffee has a bit of a woodie on at the moment, up 5% and breaking out of resistance.

There was a textbook trade early this month off support.. nice if anyone caught it.


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## Pager (19 September 2007)

wayneL said:


> A few suggestions to choose from that have reasonable liquidity and not too large.
> 
> NYBOT Cocoa CC
> NYBOT CT
> ...





Hi Wayne

Probably no right or wrong answer but!

Im interested in how you set-up your charts for these commodity markets, looking at my data I have various options as some of the markets have both Pit and electronic trading, some have after hours trading.

 I’m inclined to go for continuous contracts but for the main session (pit session) only, what would you advise in regard to the markets in your suggested list?

Also any other pieces of advice to trading these markets you could offer?

Cheers

Pager


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## CanOz (19 September 2007)

Pager said:


> Hi Wayne
> 
> Probably no right or wrong answer but!
> 
> ...




Good on ya Pager, i'll be watching this thread closely. Is that a mechanical approach you're taking?

Cheers,


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## wayneL (19 September 2007)

OK I'm no guru, this is just what I do.

The only pit contracts I trade are the CME livestock contracts, (and most options are still pit traded)

As all other contacts now have good liquidity, I trade the electronics, so chart those.

Now as to whether to chart the pit session only or 24 hours, depends on the contract and how much it generally moves out of hours.

These I use 24 hour charts.
Crude Oil
Nat Gas
Gold
T-notes Bonds etc
Currency futures.

All others I only chart the pit session, but I do keep an eye on out of hours movements with audible alarms etc. particularly, grains and NYBOT coffee. This just suits the way I like to trade.

Nothing beats simple observation and learning about each contracts specifications and nuances. Each market is different, has different opening times etc. It's a lot extra to learn over stocks, but that what attracted me in the first place to commods... non-correlation (though be careful there are some correlations between certain markets)

One thing to be careful of is that some contracts are physical delivery such as Gold. This means that at some point before the expiry of the contract, there will be a notice day where you are required to arrange for delivery. Know when this is and be out of that contract and on to the next one.

A simple clue is open interest. About 4 or 5 weeks before expiry you will notice a rapid drop in OI, this is time to consider the next contract if opening a trade, or rolling to the next contract if already in a trade.

Here is the NYBOT Coffee specs for eg:




Good luck


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## wayneL (19 September 2007)

Here is a good illustration of open interest indicator




OI is the red dots. Notice how it builds up and accelerates upwards in March. This is from traders switching to this contract from the last one.

Also Notice how it gently drops off and fall off the cliff in late May. This is traders getting out of this contract and on to the next one because of the notice period. The last month of the contract has virtually no open interest, because hardley anyone wants to take physical delivery.

Also note volume.


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## Pager (19 September 2007)

Wayne

Thanks for the info, much appreciated .

I wont be rushing into trading commodities, more get a feel for them first, have been quite successful day trading index futures mechanically so hopefully that experience will be beneficial and help.

Cheers

Pager


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## ithatheekret (7 January 2008)

We all would have heard of the mad rush to plant corn for the ethanol craze , but I actually believe this will be a negative for the corn price , they've been ripping up the soybean paddocks to plant corn . For me this sees Soya oil and bean prices in for a good rise through 08 , as a matter of fact the range of oils all look good ( not talking black gold either ) . Palm oil which virtually tracks crude prices will be set for runs too , I have not gotten anywhere near projecting a price yet . Still absorbing future prices for my crude projections , I have a $72 , 78 , 83 & 87 on the lower brackets in crude , but my top is above 100 around $114-$117 with a $2.30 swing eitherside of those numbers so far . Still well below the $116-128 it should be when taking inflation into account . If that is the case for crude , then palm oil would have to looking around $930 a tonne or higher  .

Wheat , well you must all know I'm on that at 892 , I see more upside on that , but the other soft oils too all look good in my view , the old buy the dips mantra should be rolled out , but I'm not expecting large dips yet to be honest . I do see crudes rise slowing up for a correction , but think we'll have to be rid of the heating oil rush in winter for the NH , which really only leaves us spring , before the next heavy usage stage hits again in summer drivetime in the US .


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## Wysiwyg (9 March 2008)

So i present my case ..

The fact that cocoa is hitting 20 year highs and a report from Ivory Coast that 100,000 tonnes more than last year at port for export 2nd March 2008(though mention of crops tailing off) and this excerpt from Sept. 2007 which suggests production back on trend may well mean the top is near.



> At the same time, a severe harmattan* has reduced production in Côte d’Ivoire, Ghana and Nigeria. However, production is expected to be back on trend in the 2007/2008 season, reaching a level of nearly 3.8 million tonnes. Thereafter, during the projection period from 2007/2008 to 2011/2012, production is expected to increase at an average growth rate of about two per cent.




Coupled with what may be declining consumption due to inflation and global economic downturn i lean toward a peak in prices soon.Of course a technical confirmation of top will be required by most .Only posting the historical chart and thoughts _to get a view from others_.
*dry winds from the Sahara


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