CatchThatKnife's  Instablog

Send Message
Swing Trading Commodity Spreads
My blog:
Catch That Knife
  • Weather Continuing To Drive Grains And Natural Gas 0 comments
    Aug 27, 2013 1:07 AM

    The grain and oilseed markets have started the week with a huge up-move, with expectations intensifying of a heatwave in the next 7-10 days.

    Corn and soybeans led the rally, with concerns that the yields, particularly soybeans, with be hurt.

    This was also reflected in the USDA crop conditions with both being revised lower late Monday.
    (click to enlarge)


    In regards to both corn and soy, looking at the spreads they are hugely over extended, in terms of what we have historically seen. However it's just too dangerous (in my opinion) to be trying to pick a top given the buying that continues to come in.

    I might be inclined to look at spread in wheat, which has been flying under the radar a little, given the large worldwide supply.

    Wheat is following the lead of corn and soybeans, but still has a lot of competition from other worldwide producers. This in effect is helping us get a better price with hopefully some good potential and (somewhat) limited downside.

    Natural gas has also been trending higher on the back of above average temperatures across much of the US. Prices didn't really break out higher on Monday, even given the extra heat, which makes me think there's a fair bit priced in already and people are ready and waiting for a change.

    As I spoke about last week there is the potential to look for a nice move lower when we begin to enter the shoulder season. It's also fair to say that given the late start to the ramp up in temperatures, injections aren't likely to be as high as one might expect in the peak of summer.

    I'm continuing to watch the weather closely for a potential late season sell-off on any change in outlook.

Back To CatchThatKnife's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.