Commodity Futures Weekly Review - January 11, 2009

Now for the weekly review of our commodity futures positions - current as of January 11, 2009.

First, our top blog posts from the past week:

• Is It (Finally) Time to Short US Treasuries - And Make a Fortune?
• China Starting to Regurgitate US Debt
• Marc Faber on Bloomberg: World War III Has Already Begun
  

Also our coverage of Jim Rogers' and Marc Faber's Commodity Picks for 2009 was the 2nd most popular article on Seeking Alpha for much of the week.

A review of our trades and positions from the previous week:

• Sold our mini-gold futures contract - to make way for another grains contract. This was a position sizing move - gold had not yet hit our sell stop.

• Also sold our one cocoa futures contract - also for position sizing purposes. Cocoa was not performing as well as wheat, so we decided to add to our wheat position.
  

• Bought one more wheat futures contract - wheat put in a strong performance this week, up $0.20.

• Continued to hold one corn futures contract. This was an attempt to "pyramid" our grains position and diversify. Corn was up $0.02 on the week.

• Continued to hold one cotton futures contract - we LOVE cotton at these prices - as we've discussed with before in this space. Cotton was up slightly on the week.

• And finally, the dunce cap so far goes on our decision to eat our own dog food and short the 10-Year Treasury Note. We haven't lost hope yet, but will have to exit this position if new highs are hit. It won't be the first time we've gotten burned on this trade.
  

Commodities that appear quite beaten down - but we don't own them...yet...

• Sugar
• Coffee
• Natural Gas
• Silver
• Crude Oil

Open positions

Date	Position	Qty	Month/Yr	Contract	Entry Price	Last Price	Profit/Loss
12/29/08	Long	1	MAR 09	Corn	422 1/4	412	($512.50)
12/31/08	Long	1	MAR 09	Cotton	48.52	49.33	$405.00
01/06/09	Short	1	MAR 09	T-Note (10yr)	123-285	125-220	($1,796.88)
12/24/08	Long	1	MAR 09	Wheat	579 1/4	630	$2,537.50
01/06/09	Long	1	MAR 09	Wheat	627 3/4	630	$112.50
Net Profit/Loss On Open Positions							$745.63

Account Balances

Current Cash Balance	$47,783.90
Open Trade Equity	$745.63
Total Equity	$48,529.53
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$48,529.53

---------------------------------------------
Cashed out: $20,000.00
Total value: $68,529.53
Weekly return: -2.1%
2009 YTD return: -4.5%

2008 return: -8%

***"Cash out" mostly means taxes - lately we've also been using it for living expenses, and also to finance our time management software company that was recently covered by the Sacramento Business Journal and Inc magazine.

Cocoa in Short Supply? Cocoa Futures on the Move

Just caught this informative piece on Seeking Alpha which makes a bullish case for cocoa futures, due to very tight supply.

What's driving cocoa prices higher? Supply, supply, supply.

Back in February of 2008, tight supplies were forecast in the cocoa market, along with higher prices. Analysts called for a 14% rise in cocoa prices in the U.S., which would have pushed prices up to $2,325/tonne.

They underestimated the move: Despite the broader pullback in financial markets, cocoa in NY was sitting at $2,626/tonne on Friday, December 26. If NY cocoa hangs tight, it could end the year some 30% up - an outstanding performance given the other pricing trends in commodities right now.

Music to my "long cocoa" ears.

Commodity Futures Review - January 4, 2009

Now for the weekly review of our commodity futures positions - current as of January 4, 2009.

First, our top blog posts from the past week:

• Expert Commodity Picks for 2009: Jim Rogers and Marc Faber
• GoldMoney Review: Gold Climbs for 8th Straight Year
• Jim Rogers on Kudlow: We're going to have an inflationary nightmare

Our coverage of Marc Faber's recent interview on CNBC from December 1st continues to see a lot of traffic.

A review of our trades and positions from the previous week:

• Continued to hold one cocoa futures contract - down on the week, mostly due to a sharp Friday drop.

• Continued to hold one mini-gold futures contract. Gold was stuck in the mud for the week - though it did wrap up an 8th consecutive up year vs. the US dollar.

• Continued to hold one wheat futures contract - up a bit for the week. Looking to add on further strength.

• Bought one corn futures contract. This was an attempt to "pyramid" our grains position and diversify - in hindsight, looking at the charts of each, wheat looks stronger, and we should have added to that position before initiating this one.

• Bought one cotton futures contract - we LOVE cotton at these prices - as we've discussed with before in this space.

Commodities that appear quite beaten down - but we don't own them...yet...

• Sugar
• Coffee
• Natural Gas
• Silver
• Crude Oil

Open positions

Date	Position	Qty	Month/Yr	Contract	Entry Price	Last Price	Profit/Loss
12/29/08	Long	1	MAR 09	Corn	422 1/4	410	($612.50)
12/15/08	Long	1	MAR 09	Cocoa	2586	2506	($800.00)
12/31/08	Long	1	MAR 09	Cotton	48.52	48.90	$190.00
12/24/08	Long	1	MAR 09	Wheat	579 1/4	610	$1,537.50
12/15/08	Long	1	FEB 09	Mini Gold	836.6	877.3	$1,351.24
Net Profit/Loss On Open Positions							$1,666.24

Account Balances

Current Cash Balance	$47,887.81
Open Trade Equity	$1,666.24
Total Equity	$49,554.05
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$49,554.05

---------------------------------------------
Cashed out: $20,000.00
Total value: $69,554.05
Weekly return: -2.5% *** since 1/1/09
YTD return: -2.5%

2008 return: -8%

***"Cash out" mostly means taxes, but lately we've also been using it for living expenses, and also to finance a cool new time management software startup that is starting to lift off - and was recently covered by the Sacramento Business Journal.

Weekly Futures Positions Review - December 28, 2008

Top posts from the past week:

• Lean Hog Prices Poised to Climb in 2009
  
• Why eBay is the Best Indicator of Gold's Fair Value
  

Our coverage of Marc Faber's recent interview on CNBC from December 1st continues to see a lot of traffic.

A review of our trades and positions from the previous week:

• Continued to hold one cocoa futures contract - up slightly on the week. Looking to add to this position on higher high's.
  

• Continued to hold one mini-gold futures contract - a nice bounce on Friday for Gold also made this position a solid performer on the week. Looking to pyramid if/when gold makes a serious run at $1,000.
  

• Purchased one wheat futures contract. All of the grains look like they are now breaking out - the corn and soybean charts look very similar. I think the grains are seriously oversold, and the bullish fundamentals are quite intriguing at these price points. I prefer wheat and corn over soybeans personally from a fundamental perspective.

Our wish list...everything here looks beaten down...some starting to form a bottom it appears...

• Sugar
• Coffee
• Cotton
  
• Natural Gas
• Silver
• Crude Oil
• Corn

Open positions

Date	Position	Qty	Month/Yr	Contract	Entry Price	Last Price	Profit/Loss
12/15/08	Long	1	MAR 09	Cocoa	2586	2616	$300.00
12/24/08	Long	1	MAR 09	Wheat	579 1/4	599	$987.50
12/15/08	Long	1	FEB 09	Mini Gold	836.6	870.6	$1,128.80
Net Profit/Loss On Open Positions							$2,416.30

Account Balances

Current Cash Balance	$47,916.42
Open Trade Equity	$2,416.30
Total Equity	$50,332.72
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$50,332.72

Cashed out: $20,000.00
Total value: $70,332.72
Weekly return: 4.9%
YTD return: -8.6%

***"Cash out" mostly means taxes, but lately we've also been using it for living expenses, and also to finance a cool new time management software startup that is starting to lift off - and was recently covered by the Sacramento Business Journal.

Weekly Futures Positions Review - December 21, 2008

Top posts from the past week:

• Inflation or Deflation - Which Will Prevail?
• Fed Out of Ammo; Dollar is Toast
• Stratfor: Oil Prices Likely to Remain Low

Our coverage of Marc Faber's recent interview on CNBC from December 1st continues to see a lot of traffic.

A review of our trades from the previous week:

• Bought a Swiss Franc position on Tuesday. Tried to pyramid with another position Wednesday night. Sold both on Friday - about even after it was all said and done. Check out this volatility:

• Bought an Australian Dollar position on Tuesday - sold it on Friday at a loss. Again, we unsuccessfully timed the breakout here.

• Bought a Mini-Gold position. Again, tried to buy the breakout.

• Bought a Cocoa position. Ditto.

Our wish list...everything here looks beaten down...silve

• Sugar
• Coffee
• Cotton
  
• Natural Gas
• Silver
• Crude Oil
• Wheat
• Corn

Open positions

Date	Position	Qty	Month/Yr	Contract	Entry Price	Last Price	Profit/Loss
12/15/08	Long	1	MAR 09	Cocoa	2586	2587	$10.00
12/15/08	Long	1	FEB 09	Mini Gold	836.6	837.5	$29.88
Net Profit/Loss On Open Positions							$39.88

Account Balances

Current Cash Balance	$47,927.72
Open Trade Equity	$39.88
Total Equity	$47,967.60
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$47,967.60

Cashed out: $20,000.00
Total value: $67,967.60
Weekly return: -3.6% --> Mostly due to the bad Aussie dollar trade
YTD return: -11.9%

***"Cash out" mostly means taxes, but lately we've also been using it for living expenses, and also to finance a cool new time management software startup that is starting to lift off - and was recently covered by the Sacramento Business Journal.

Commodity Research Bureau: Foods and Softs Outlook

Remember when the grains and softs were doing moonshots, and every other column here was about bullish news for food prices? Seems like just yesterday I was imploring a much smaller readership base to sugar me sweet.

While my favorite soft commodities (sugar, coffee, cotton) remain parked on my wish list as we wait for an uptrend, here's a free outlook on cotton, coffee, sugar, cocoa, and OJ from the Commodity Research Bureau.

Looks like sugar production is still outpacing sugar consumption - but what the heck, let's see if we can channel the great sugar bull together:

Current Commodity Futures Positions - 8/24/08

A review of trades from the week that was:

• Covered my Soybean Short - beans rallied, along with the rest of the grains. Closed this out at a loss. And a good thing too - the grains markets continue to rally strong, even into the Asian session this evening. I can't make heads or tails of the grains markets, and I don't think any clarity will be found until the harvest results are in - I'm on the sidelines here for a bit.

• Also covered by Cocoa Short, also at a loss - took a bath on the big cocoa rally. It gapped up, and I got out.

Looking ahead:

• British Pound Futures - The dollar rally rolls on, and the British Pound continues to get slammed. I plan to hold this position.
• Silver Futures - I keep trying to unsuccessfully time a bottom here. I should know better. Still, I expect silver and gold to rally strong towards the end of the year.
  

My wish list (waiting for an uptrend):

• Sugar
• Cotton
  
• Coffee
• Swiss Franc
• Japanese Yen
• More silver
• More cowbell
  

Open Positions

Date	Position	Qty	Month/Yr	Contract	Entry Price	Last Price	Profit/Loss
08/12/08	Short	1	SEP 08	British Pound	1.9042	1.8391	$4,068.75
08/21/08	Long	1	DEC 08	Mini Silver	1390.1	1337.0	($531.00)
Net Profit/Loss On Open Positions:							$3,537.75

Account Balances
Current Cash Balance	$52,980.25
Open Trade Equity	$3,537.75
Total Equity	$56,518.00
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$56,518.00

Cashed out: $18,000.00
Total value: $74,518.00

Weekly return: -4.7%
YTD return: -2.8%

***"Cash out" mostly means taxes, but lately I've also been using it to pay down my credit cards a bit. Why credit card debt? I'm financing a startup and trying to outpace my CC interest rate in the futures markets :)

Jurgens Bauer on the soft commodities

I don't see too many free columns from good old Jurgens anymore, but they're always worth a read. Comments on coffee, cocoa, sugar, and cotton.

I love reading takes from these old-time commodity traders, as they provide good, rational perspectives. Plus always amusing to see how baffled they are at the circus these markets have turned into.

Money Morning: Avoid Coffee & Cocoa, Buy Sugar

Nice simple breakdown of 3 of our favorite softs - coffee, cocoa, and sugar - by the folks at Money Morning.

I did not realize the coffee harvest is looking so good - suppose that's why coffee cannot break out of it's range. Same with cocoa - I have been avoiding due to the sharp recent drops - it looks like cocoa has no business at these prices.

We'll continue to keep a close eye on sugar prices - keep waiting for the next big sugar rally!

Any news on cocoa?

Big drop today - I can't find any news to support.

Best I can find is that the recent rally was based upon supply concerns, and I'm sure spec buying no doubt.

I just covered my position here - no point hanging on after a big gap down like this, I think.

What's Moving Now

I just picked up a Cocoa contract. I had been eying cocoa for about a week, but wanted enough validation to pull the trigger. Of course now I wish I had pulled it sooner - but that's the way it works.

Check out the cocoa chart here - very strong rally following up from the recent nasty correction. I haven't been able to find much news, other than funds buying (surprise, surprise) and a lack of sellers (gee, thanks). Though the lack of sellers is a bit interesting - perhaps all the weak longs were shaken by the recent correction.

Rough rice also appears to be in runaway mode - supply concerns are driving this. Nice quote from this article:

"There's been a popular misconception that the world can produce as much food as it likes. Well, it obviously can't. And Asia can't feed itself at the moment," Gerry Lawson, chairman of major Australian rice producer Sunrice, told Reuters.

That sums up the bull market in agriculture pretty nicely. If rice keeps running away, I may start walking around town wearing this man's jersey:


Corn - both technically and fundamentally - looks poised to continue its steady climb up. There is not a lot of room for error with this year's corn crop, considering so much is already "earmarked" (hardy har har) for ethanol.

And coffee's looking hot also, as news about disappointing Brazil exports, combined with the ever weakening dollar, has folks piling back into coffee contracts. Aw heck, I might have to pick up one of these contracts after I finish writing this post :)

Kevin Kerr: A Grainy Picture

Unfortunately Agora has not yet posted the full article yet in their Rude Awakening archives - keep an eye out.

Same story we all know - agriculture is poised to go much higher, and the softs (sugar, cotton, cocoa, coffee) look particularly undervalued.

Kevin Kerr's Hot Commodities for '08

Over at Agora, commodities guru Kevin Kerr listed his hot commodities for '08.

In short, he likes the soft commodities - especially cocoa, coffee, and sugar. Both coffee and sugar have been pushing higher over the past couple of weeks.

I picked up another sugar contract this morning in an attempt to pyramid this rise. Hopefully it will continue!