Corn and Ethanol

[EGStocks]

hello everyone..

wont get you into details about this subject, but i just want to discuss with you Ethanol production and the shift in Corn prices during the end of last year and 2007 as well, anyone think that this is a bubble that soon to burst or it is here to stay and actually we will need to plant those 90 million acres this year to bypass Food/Energy war ?

personally i think it is a bubble that will burst in 2007 with a new crop around 12.7 billion MT and the ethanol plants that are currently under constructions should fully operate starting 2010 - 2012 which is 3 to 5 years.

maybe am wrong, maybe am optimistic or maybe i already bought some puts
any ideas

 

[wayneL]

hello everyone..

wont get you into details about this subject, but i just want to discuss with you Ethanol production and the shift in Corn prices during the end of last year and 2007 as well, anyone think that this is a bubble that soon to burst or it is here to stay and actually we will need to plant those 90 million acres this year to bypass Food/Energy war ?

personally i think it is a bubble that will burst in 2007 with a new crop around 12.7 billion MT and the ethanol plants that are currently under constructions should fully operate starting 2010 - 2012 which is 3 to 5 years.

maybe am wrong, maybe am optimistic or maybe i already bought some puts
any ideas

I reckon ethanol is a farce that will be exposed eventually.

Plus, there were considerable swathes of forest chopped down to produce reports that Corn must go to $5.50/bushel... Which convinces me that it won't

 

[wayneL]

I reckon ethanol is a farce that will be exposed eventually.

Plus, there were considerable swathes of forest chopped down to produce reports that Corn must go to $5.50/bushel... Which convinces me that it won't

Beans and particularly Bean Oil could surprise to the upside though.

 

[EGStocks]

Beans and particularly Bean Oil could surprise to the upside though.

while i do agree with you that beans should get its share of price shifting this year, and looking at the degraded acreages being planted this year, still i see that movement in beans exports are way to slow, and with April ending stocks
615 Million B. we will be safe next year if all went well during the weather market.. i look for beans to tumble on the 750 - 773 area which is where we are at now. so am going to look for buying some June serial 750 puts tomorrow...

will let you know

 

[EGStocks]

while i do agree with you that beans should get its share of price shifting this year, and looking at the degraded acreages being planted this year, still i see that movement in beans exports are way to slow, and with April ending stocks
615 Million B. we will be safe next year if all went well during the weather market.. i look for beans to tumble on the 750 - 773 area which is where we are at now. so am going to look for buying some June serial 750 puts tomorrow...
will let you know

i bought my puts today, and beans did a nice job. i did not buy them on the serials cause of the low volume :bananasmi

 

[professor_frink]

I reckon ethanol is a farce that will be exposed eventually.

Why do you say that Wayne?

 

[wayneL]

Why do you say that Wayne?

http://www.sciencedaily.com/releases/2005/07/050705231841.htm

 

[professor_frink]

http://www.sciencedaily.com/releases/2005/07/050705231841.htm

Cheers

 

[EGStocks]

http://www.sciencedaily.com/releases/2005/07/050705231841.htm

Thanks for the link wayneL, while its little bit old, i still like the details there (maybe because i am bearish to the grain markets, i dont know )

 

[wayneL]

i bought my puts today, and beans did a nice job. i did not buy them on the serials cause of the low volume :bananasmi

These must be in the black for you now.

Next question is whether it breaks out of this damned channel. You would think so, savage selling today.

 

[CanOz]

http://www.sciencedaily.com/releases/2005/07/050705231841.htm

Hmmm, no wonder Big Oil has no quarrel with Ethanol! I always wondered why they have said nothing against its production lately.

Ethanol production also has the obvious side effect of making the worlds staple crops ridiculously expensive.

Thanks for the link Wayne, i hope more people realise this farce.

Cheers,

 

[wayneL]

Beans and particularly Bean Oil could surprise to the upside though.

Anybody watching/trading these on the long side?

I get to be right this time! Most of my public calls have turned to sh!te lately, so pardon me for having a brag before my next call turns to sh!te! LOL

 

[CanOz]

Looks like a cup and handle on the monthly Wayne. You know i don't think its too late to get into a trade on this....maybe a little pullback first and a tight stop just in case.....you long any other soft commods?

Cheers,

 

[wayneL]

.....you long any other soft commods?

Cheers,

Well, I don't like to say unless I call it at the time. But one I'm "looking" at is NY Coffee. If it breaks out of this little micro-pennant, I might hop aboard.

PS Looks like you got your Premium Data Working OK. It's a nice downloader eh?

 

[CanOz]

The Premium Data Tools are great, i'm also trialing the ASX and US Stocks data. Also, trading EOD has shed a new light on things for me.

Heres my chart of coffee, and cocoa. I got stopped out of both last nite! My stops have been pretty tight, and i don't think i'm waiting for the best setups.

I'm looking for another entry into both of these this week. I'm sort of limited on the contracts i can trade due to IG's universe of futures.

Starting to think this is a mugs game using CFD's for future contracts.

Cheers,

 

[>Apocalypto<]

The Premium Data Tools are great, i'm also trialing the ASX and US Stocks data. Also, trading EOD has shed a new light on things for me.

Heres my chart of coffee, and cocoa. I got stopped out of both last nite! My stops have been pretty tight, and i don't think i'm waiting for the best setups.

I'm looking for another entry into both of these this week. I'm sort of limited on the contracts i can trade due to IG's universe of futures.

Starting to think this is a mugs game using CFD's for future contracts.

Cheers,

Can,

Some advice from my expirenece trading actual futures.

you need wider stops as there is much more aggression in the markets, very good position size rules and money managment system.

I had a hell of time in feeder cattle with tight stops.

I agree with you comment on its a mugs game using CFD's in futures markets. due to the spreads. I would advise using a futures broker I have a account with xpress trade they also offer a FX platform as well. I found them to be very good but there charts are just so so, but still fee real time.

I would love to get back to futures trading but the hours are a killa.

only advantage of IG futures is 24 hour access but there charts are only good on short term and you need overall market veiw to know what trend your ridding. also you will never be hit by limit sessions.

I see your using amibroker how are you finding them? I am about to drop bourse and buy it as well. it has so many options with different data feeds its great. Plus what you can do with it!

but i hate the fact i spent $400 on the software for bourse!

I am not using ig charts on futures right now using gold eod charts from bourse plus on XJO DOW i use bourse chart for overall direction and ig to track the short term trend i have a position on.

last thing, futures are a whole differnt kettle of fish and can be a real eye opener!

Good trading buddy.

 

[CanOz]

Thanks for the advice TI. I'm going to take Nick Radge's course on futures soon.

Very interested in trading commodity and index futures. Really only been trading small mini positions to get the feel for the markets.

Amibroker is fantastic charting software, i only use it for EOD and bought it with the view to developing systems eventually. They now have a wizard for the helping to learn the programing language too!

Cheers,

 

[wayneL]

Can,

Some advice from my expirenece trading actual futures.

you need wider stops as there is much more aggression in the markets, very good position size rules and money managment system.

I had a hell of time in feeder cattle with tight stops.

I agree with you comment on its a mugs game using CFD's in futures markets. due to the spreads. I would advise using a futures broker I have a account with xpress trade they also offer a FX platform as well. I found them to be very good but there charts are just so so, but still fee real time.

I would love to get back to futures trading but the hours are a killa.

only advantage of IG futures is 24 hour access but there charts are only good on short term and you need overall market veiw to know what trend your ridding. also you will never be hit by limit sessions.

I see your using amibroker how are you finding them? I am about to drop bourse and buy it as well. it has so many options with different data feeds its great. Plus what you can do with it!

but i hate the fact i spent $400 on the software for bourse!

I am not using ig charts on futures right now using gold eod charts from bourse plus on XJO DOW i use bourse chart for overall direction and ig to track the short term trend i have a position on.

last thing, futures are a whole differnt kettle of fish and can be a real eye opener!

Good trading buddy.

I don't think futures markets are any more aggressively traded than stocks. In fact, many of the stocks I trade are far more volatile than any futures market.

The key is in your comments about position sizing. The underlying face value of a single contract is actually quite large in some markets.

For instance 1 single crude contract has a face value of ~AUD$80,000. With a statistical volatility running at 30%, that's a lot of dollars of wiggle room you have to give it. Prohibitive for smaller accounts unless day trading.

Even the emiNY is still ~AUD$40,000 face value.

Thats a big position size for a 30% instrument in a modest account.

Feeders ares ~AUD$70,000 atm

This is where stocks have a definite advantage over futures, in the completely adjustable position size. With stocks you can trade precisely $5,000 worth (give or take a few bucks) 8,000, 13,500, 23,250 81,234, whatever you want to precisely fit your risk parameters.

I like futures for other reasons, but this is a factor that shouldn't be ignored.

I reckon you need a minimum account size of $250,000 to trade all futures AND have sensible money management.

That said, There are smaller contracts available:
Corn is ~AUD$23,000
London Coffee roughly $10k as a couple of examples

 

[CanOz]

More great advice, thanks Wayne. How did you educate yourself on futures?

Also, what are the other reasons you like futures?

Cheers,

 

[wayneL]

More great advice, thanks Wayne. How did you educate yourself on futures?

Also, what are the other reasons you like futures?

Cheers,

Canoz,

I did Nicks futures course a few years ago. That was a great start, plus you just pick up little packets of information as you go along.

Experience teaches you things too... (as we all know ) Still a lot of that to do!

Neophyte: Sir, Why are you so good at what you do?
Old Timer: I make good decisions.
Neophyte: How do you know what good decisions are?
Old Timer: Experience
Neophyte: How do you get experience?
Old Timer: Making bad decisions!!!!!

Ain't that the truth LOL

Other reasons I like futures... I like the non-correlation of returns. Stocks are highly correlated, even across sectors and a shake out will affect everything.

Using correct position sizing, this non-correlation reduces drawdown and it's drawdown that particularly messes with my head. It's my weakness and so I trade around that with both instrument and style.