Updates

Natural Gas

It appears that the weather outlooked has changed slightly and as a result there is nothing fundamentally supporting NG at the moment. The forecast was supposed to be warmer but that looks to have changed.

The NG spread has been drifting our way and as a result I'm tightening the stop to 23.6.

Live Cattle / Hogs

This one has also been moving our way.

There's talk of a seasonal top in hogs, but we have to be careful as they have been really strong.

Stop tightened to 35.0.

USDA

With the acreage and grain stocks due to be released this week I'll be getting out of all of my grain positions.

We saw some positive moves in the grain spreads Friday and this might be a nice time to lock in a quick profit.

I think the numbers are just too significant to be holding into.

Watchlist

I've been keeping an eye on this particular spread for a while now as I like the look of the seasonal window and it appears to be setting up nicely.

I've been hesitant to enter though, given the underlying strength we've seen in lean hogs.

Yesterday was more of the same hogs with talk that there was large buying going into July 4th, which is traditionally the largest BBQ date of the year.

In this instance I see strength in hogs which is bad for us, however the spread held up really strongly given the action. That said Hogs appeared to be driving the overall meat market and we saw gains in both live and feeder cattle.

Just something I thought I'd point out as it makes me like this one even more.

Watchlist

I'm still keeping an eye on a couple of spreads that look to be setting up nicely.

Cattle/Hogs

This one looks like it's hitting a decent level of support.

My one concern was the recent strength in hogs which might not be advisable to fade.

Soybeans

Again this one looks to be setting up nicely with a good strong seasonal window.

My only concern is the USDA quarterly grain stocks which is due to be released on June 28th.

It might be advisable to wait before entering as the window doesn't open for a while.

USDA

There are two major reports due out on the 28th June, the grain stocks and acreage numbers.

These will no doubt be market moving numbers.

If you're looking to hold into them be prepared. Otherwise you could trade around them, or not trade at all.

Quite often we have to hold into monthly WASDE reports if we are to trade the grain spreads.

Quarterly numbers are a touch more difficult to know what to do with.

Either way it's something to consider and be sure to manage your risk accordingly.

Natural Gas

Natural Gas

I've been keeping an eye on some NG spreads for a while now and waiting for the right time to enter.

Some of the current ones have seasonal windows ending around July 10.

That gives us a few weeks.

I tend to like the longer seasonal windows and this one looks reasonable.

We are seeing a nice level of support here and there are two seasonal windows. One in a weeks time and another longer one. It might be an opportunity for a nice longer term trade.

NG spreads saw a sharp reversal on Monday and this might be a good opportunity to enter.

On this particular spread we are seeing a decent divergence from seasonality which I often like to trade.

The first window is June 23-July 10. It's been right 100% of the time over the last 15 years with an average profit of $1000.

I think you could risk $1000 on the trade and potentially trail the stop all the way into the second seasonal window which runs July 29-Sep 2. Something to consider.

28 looks a good price.

Wheat / Corn

Wheat - Corn

From a technical perspective I quite like the look of this one.

We've been bouncing off support here a number of times now as we head into a short and sharp seasonal window.

Inter-market spreads however can be volatile and this one suggests a risk of $1600 per contract.

In the last 15 years this one has been a winner 87% of the time with the average win being $1600 and the average loss being $700.

That looks a reasonable risk reward and in all honesty I think you could probably risk less than $1600. I'd say $1000, after examining the worst equity amounts.

The fundamentals however look a little different.

The supplies of old crop corn are quite tight. As a result there has certainly been strength in those contracts lately as farmers look to get their hands on supplies for feed. That said this is a new crop contract that we're looking at.

As for wheat it looks more neutral, with large crops around the world coming online.

We also looked at entering another corn spread and you might not what to increase your exposure to corn even more.

Potential to get long at 160.

Watchlist

Soybeans

I just wanted to throw this one onto the wachlist. I always like to see an extended seasonal window and this one looks quite solid.

Lets keep an eye on it next week and see if we can get a slightly better price before the window opens.

I'll have a closer look at the fundamentals as we get closer.

Corn

With Corn looking increasingly bearish I'm entering this one at -27'6.

I have a stop at -35'6.

Watchlist

Corn

Corn has seen a reasonably bearish WASDE report on Wednesday and as new crops continue to develop we have a historically bearish seasonal window.

This one's been bouncing off a traditional support level around -26 and it might prove to be a decent entry. Old crop supplies are somewhat tight however with a large crop forecast this spread still has some decent potential especially coming off such a low base.

History suggests we're able to risk $400 per contract.


Natural Gas

While I'm not ready to jump in just yet I've really been watching this one closely. There is nothing fundamentally bullish about NG in the short term. The NOAA forecast is reasonably average which leads me to believe there won't be any heating or cooling demand in the immediate future.

Storage came in with a net injection of 95 BCF which was in-line with expectations.

Ideally I'd like to try and work as close to 0.2 as we can so I'll be keeping an eye on this one. There are a few spreads in NG that we can use with most running until the mid July.

This one says we need to risk around $1200 per contract which seems quite high to me. NG is somewhat liquid and slow moving. It might be worth checking the ATR of a few of the spreads and getting a better risk/reward.

Watchlist

Natural Gas

I've been keeping an eye on this one for a while now. NG remains bearish in my opinion with continued injections into storage and no cooling related demand on the immediate horizon.

There are a few good NG spreads to watch with most running until mid July.

Wheat - Corn

This is a short little pattern, which might actually be a little too short for my liking but it's one to keep an eye on as it gets nearer.

Kansas Wheat - Soybeans

Again another short term one which I don't overally like. Just keeping an eye on it for now. These inter-market spreads can also be rather volatile at times.

Corn

We saw a somewhat bearhish WASDE report yesterday and that might help this spread. While it's a little early there seems to be a nice support level where we're currently at and a good solid seasonal window.

With the delayed plantings catching up over the last couple of weeks, hopefully corn is back on track, however some doubt still remains around potential yield losses and what the final acreage is going to look like.

Live Cattle - Lean Hogs

I like the look of this one in terms of the really solid seasonal window. There is a nice support level here that we are currently at based on the 15-yr average also.

However I'm still a little worried about betting against Hogs. They have been super strong of recent times against a backdrop of talk of buying from China and the recent Smithfields takeover.

That said there is also talk of Hogs getting toward the top of their run. Something to consider.