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.
  

Warren Buffett Interview on CNBC

Video Link

My notes:

• He is VERY concerned with the current levels of inflation. This is striking, as you rarely hear Warren Buffett mention inflation.
• If he were in Bernanke's shoes, he would "offer his own resignation".
• Still believes the dollar will weaken further over time - mentioned lack of Congressional discipline.
• Oil price is being driven by supply/demand, not speculators. For the first time in his lifetime, there is no excess capacity. Speculators are not driving the price because they are not storing it - for each speculative long, there is a corresponding speculative short.
• And then he rambled on about his socialistic views - I should pay more taxes, blah, blah, blah.
  

How to Save the Airline Industry (High Comedy)

Check out the solution floated by the CEO of Ryanair. Faaaaaaaaaaaaaantastic.

Basics on Trading Meat Futures

Nice article here by Kevin Kerr on the basics of the meat markets and trading meat futures.

Everything sure is setup for higher meat prices. I think this is a temporary breather this week, as the live cattle charts were going parabolic for the last couple of weeks.

I have not checked my account since Sunday - I don't want to see the raw $$$ I'm off. Instead I'm just watching the charts and trying to keep perspective on things - by later next year and early next year, these prices are most likely higher, so I want to ride this through thick and thin.