Current Commodity Futures Positions - 7/13/08

Another tough one - got to put it in the past, though. Facts are, this system works great when futures are going up, and not so great when they are going sideways/down. And lately, I just haven't been in the particular futures that are going up (oil looked nuts at $110 - who would have thoughts we'd see almost $150 so soon!)

Live Cattle Futures
Keeping the faith - I've been stopped out of most of my live cattle positions. Still like these a lot in the medium/long term, but have to respect the market. Will look to build these up again on strength. These were slightly disappointing, but I may have gotten into these a bit too late.

Sugar Futures
Oil has gone up 12x, from $12 to $144, over the last 10 years. Sugar is sitting at 13 cents, up from a multi-decade low of 5 cents. It's going higher, much higher, at some point in the next 5-10 years.

Cotton Futures
What a giant turd cotton has been for the last two years! Still, I think this turd will have it's day. Who the hell is still planting cotton with $7 corn and $15 beans???

Open Positions

Date Position Qty Month/Yr Contract Strike Call/Put Entry Price Last Price Profit/Loss Market Value Action 06/17/08 Long 1 DEC 08 Cotton 82.20 73.65 ($4,275.00) 06/19/08 Long 1 FEB 09 Live Cattle 116.200 112.500 ($1,480.00) 06/18/08 Long 1 OCT 08 Sugar #11 12.88 13.97 $1,220.80 07/01/08 Long 1 OCT 08 Sugar #11 13.90 13.97 $78.40 Net Profit/Loss On Open Positions: ($4,455.80)

Account Balances
Current Cash Balance	$85,756.63
Open Trade Equity	($4,455.80)
Total Equity	$81,300.83
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$81,300.83

Cashed out: $15,000.00
Total value: $96,300.83

Weekly return: -7.5%
YTD return: 22.6%

***BTW, I usually "cash out" money just to pay for taxes, rent, and cheap beer. So total value is all pre-tax.

Current Commodity Futures Positions - 7/06/08

Well not a great week - disappointed in cotton especially, and coffee to end the week. A few thoughts on the positions:

Cotton Futures
Cotton broke sharply to the downside, as I managed to pin the tail on the local top. However I believe the downside here is limited, so I'm planning to hang on for a bit. Let's face facts - lowest level of cotton acreage in 25 years. It is going to $1+, just a matter of when. And with the Dec contract sitting at 75 cents, I like the odds of it going to $1 a lot more than I like the odds of it going to 50 cents (in fact I think if it goes much lower, it may be "back up the truck" time).

Coffee Futures
Coffee was looking strong until Friday, when the Sept contract shed 4 cents. Coffee's volatility always makes me sick to my stomach, and this ride with it is no different. Coffee's another crop that's been due for a mega-spike, and we just haven't seen it yet. Maybe this is the time, but if it's not, I'll look to exit quickly. However I may not be quick enough - this volatility can really nail you if it gaps down.

Sugar Futures
Looking strong, I'm planning to pyramid each cent up if this climb continues.

Live Cattle Futures
Holding tight here for now as well. Not looking to add, but watching these contracts closely. I like the Dec and Feb contracts more than I like the Oct. Everyone knows cattle is going higher, but is it already priced into the forward looking contracts? I think the upside potential still outweights any downside (which I view as minimal). However it's frustrating to see the meats trade in concert with the grains - I think no matter where the grains go from here, the input costs will still be sufficiently high to push the meats higher in the long term. However like it or not, they are trading in concert with the grains in the short term - and the grains are down big in Asia tonight as I type, so possibly look out tomorrow.

Open Positions Date Position Qty Month/Yr Contract Strike Call/Put Entry Price Last Price Profit/Loss Action 06/17/08 Long 1 DEC 08 Cotton 82.20 75.86 ($3,170.00) 06/26/08 Long 1 SEP 08 Coffee 'C' 153.30 151.25 ($768.75) 05/08/08 Long 1 OCT 08 Live Cattle 105.350 111.525 $2,470.00 05/09/08 Long 1 OCT 08 Live Cattle 106.700 111.525 $1,930.00 06/16/08 Long 1 DEC 08 Live Cattle 112.750 114.500 $700.00 06/19/08 Long 1 FEB 09 Live Cattle 116.200 116.100 ($40.00) 06/18/08 Long 1 OCT 08 Sugar #11 12.88 13.89 $1,131.20 07/01/08 Long 1 OCT 08 Sugar #11 13.90 13.89 ($11.20) Net Profit/Loss On Open Positions: $2,241.25

Account Balances
Current Cash Balance	$85,609.47
Open Trade Equity	$2,241.25
Total Equity	$87,850.72
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$87,850.72

Cashed out: $15,000.00
Total value: $102,850.72

Weekly return: -5.3%
YTD return: 31.4%

***BTW, I usually "cash out" money just to pay for taxes, rent, and cheap beer. So total value is all pre-tax.

Money Morning: 3 Ways to Profit From Record Meat/Dairy Prices

Full article

Current Commodity Futures Positions - 6/29/08

A nice little week - good to be back in the win column. Things cooled off later in the week for me, mostly as wheat plummeted in late trading hours Friday morning. However cattle ended the week very strong, which was great to see.

My new policy of watching the charts, rather than my account, helped me keep my zen about me. I'd recommend this to anyone who feels a pit in your stomach watching big $$$ evaporate by the minute. Better to calculate your position sizes, then put the position on, and detach yourself from it.

On a personal note, I had set a stretch goal of doubling my account during the first half of the year. Then I would have the second half of the year to double it again, and if I came close, then poof - I'd have some degree of financial autonomy.

Unfortunately it didn't happen, though there were some very promising moments (esp. the rocket start early in the year). However can't complain at all about 38% YTD. I'm looking forward to the 2nd half of the year, as I think cattle, sugar, cotton, and coffee all have rally potential. That doesn't mean it will happen, but it's worth keeping an eye on and a toe in the water.

Open Positions

Date Position Qty Month/Yr Contract Strike Call/Put Entry Price Last Price Profit/Loss 06/17/08 Long 1 DEC 08 Cotton 82.20 81.15 ($525.00) 06/26/08 Long 1 SEP 08 Coffee 'C' 153.30 151.95 ($506.25) 05/08/08 Long 1 OCT 08 Live Cattle 105.350 112.400 $2,820.00 05/09/08 Long 1 OCT 08 Live Cattle 106.700 112.400 $2,280.00 06/16/08 Long 1 DEC 08 Live Cattle 112.750 114.900 $860.00 06/19/08 Long 1 FEB 09 Live Cattle 116.200 117.000 $320.00 06/18/08 Long 1 OCT 08 Sugar #11 12.88 12.78 ($112.00) 06/11/08 Long 1 SEP 08 Wheat 867 3/4 908 $2,012.50 Net Profit/Loss On Open Positions: $7,149.25

Account Balances
Current Cash Balance	$85,663.00
Open Trade Equity	$7,149.25
Total Equity	$92,812.25
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$92,812.25

Cashed out: $15,000.00
Total value: $107,812.25

Weekly return: 2.9%
YTD return: 38.0%

***BTW, I usually "cash out" money just to pay for taxes, rent, and cheap beer. So total value is all pre-tax.

Futures thoughts to wrap up the week

Thoughts on the commodity futures markets as we put a wrap up on the week:

• Oil topping 140 as I write - this market continues to defy gravity. Too scary for me to try and play either side of this market.

• The Fed's decision to stay put (a real shocker) really put a kick start in commodities across the board.

• The grains have rallied further this week - I'm glad I still have my wheat position, and wish I still had my corn position.

• Not to dwell on what could have been, live cattle is rallying after a slow start to the week. Personally I am more cautious of the nearer term contracts, but still bullish on the Dec '08 and '09 contracts. However I am not looking to add more yet, as I'm comfortable with this 4 contract base on my pyramid.

• The softs have also been rallying, with coffee leading the charge. I finally jumped into coffee yesterday - and true to form, it's down a bit today. I am cautious of this recent coffee charge, as I'm not sure how much has been pure speculation, and how much is really on supply concerns. But I do think coffee has huge upside potential from here (eventually), so there's no use sitting on the sidelines forever.

• Looks like that dollar pop may be over - and the party may definitely be over on Wall St. I expect the commodity markets to turn even wilder over the next year or two, as the mass exodus to this asset class continues. Net-net this should be a positive thing for us - just take your positions early, and be careful on the leverage, as the volatility will be quite choppy.
  

Weekly Positions Update - 6/22/08

Sticking with the rules here, I'm now into cotton and sugar on their respective breakouts. Still like the live cattle and added some longer dated contracts this week. Will probably not add to this position, as it's heavy enough.

Got scared out of corn early - I ended up selling at the break even mark. Wheat is now breaking down a bit, as are the rest of the grains. Time will tell if this is a breather, or if things were overdone during the past breakout. I'm leaning towards breather, as I think things are worse in the Midwest than many believe.

And how about coffee and it's 7-cent pop on Friday...don't we wish we were in that one :( Well prior to the breakout, it was the pure definition of range bound. So unless you caught it right on the breakout, it's really tough to kick ourselves over missing it. Hey, if it's really heading higher, we'll have plenty of time to get into the trade.

Open Positions

Date Position Qty Month/Yr Contract Strike Call/Put Entry Price Last Price Profit/Loss Market Value Action 06/17/08 Long 1 DEC 08 Cotton 82.20 79.99 ($1,105.00) 05/08/08 Long 1 OCT 08 Live Cattle 105.350 112.100 $2,700.00 05/09/08 Long 1 OCT 08 Live Cattle 106.700 112.100 $2,160.00 06/16/08 Long 1 DEC 08 Live Cattle 112.750 113.600 $340.00 06/19/08 Long 1 FEB 09 Live Cattle 116.200 116.100 ($40.00) 06/18/08 Long 1 OCT 08 Sugar #11 12.88 13.00 $134.40 06/11/08 Long 1 SEP 08 Wheat 867 3/4 873 1/2 $287.50 Net Profit/Loss On Open Positions: $4,476.90

Account Balances
Current Cash Balance	$85,680.27
Open Trade Equity	$4,476.90
Total Equity	$90,157.17
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$90,157.17

Cashed out: $15,000.00
Total value: $105,197.17

Weekly return: -2.7%
YTD return: 34.5%

***BTW, I usually "cash out" money just to pay for taxes, rent, and cheap beer. So total value is all pre-tax.

Livestock Report

Have to admit - I'm a bit frustrated with the weakness in the meats, especially in the face of this grains rally. Doesn't seem to make much sense, and I can't see a scenario where meat prices are not higher in 6-12 months.

This livestock report helped calm me down - it looks like farmers are still slaughtering livestock ahead of schedule, since it's not worth feeding them at these high prices. If that's the case, this pullback represents a fantastic buying opportunity.

Commodity Market Thoughts

• Cattle's looking good - I'm keeping an eye on the Feeder market also. Wish I still had all my Live Cattle contracts, but oh well - looking to add on a new breakout.

• Pork bellies are not looking good - same article linked above mentions too much supply on the market.

• Quite a breakout by gold and silver over the past few days. Silver looks particularly intriguing, as it has a compelling supply/demand story also. I believe both are sitting right around their 50-day moving averages.

• All the commodity currencies are rallying quite strong. Will be interesting to see if the Aussie dollar can stay strong if the market turns down. I personally think there will be some short term panic selling, which will also drive the Japanese Yen and the Swiss Franc up.

• Sugar, as our buddy Toby said once, is acting like a giant turd. Too much supply on the market, it appears. Long term it's going much higher - until then, probably best to wait.

• Coffee is looking strong also. I'm going to sit back and wait on this one - coffee head fakes more often than #24.
  

Where's the Beef?

Whoa, how'd I miss the recent rally in live cattle? It make so much sense fundamentally - Asia eating more meat, high grain prices putting the squeeze on meet production, etc...I just fell asleep at the wheel a bit here.
Here's an article I found on BarChart regarding the livestock markets.

I also read over the weekend that Doug Casey has been buying up some meat contracts, on the logic that high grain prices will eventually equate to high grain prices. Is it time for us to pull the trigger as well here?