Elgrey's  Instablog

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Expat finance professional living and working in Hong Kong.
  • My March-14 Strategy 0 comments
    Mar 12, 2014 10:30 PM

    This is a bit late but still...

    Cocoa, cotton - my opinion these two stuck in a range. Cocoa market keeps on telling us the same old mantra - shortages, shortages, shortages... But crop is strong so market has no moto to drive further up. At the same time there is no catalyst to move down either. My bet is that until next round of grinding report are issued during mid of April the market stays stagnant. For cotton I look at historical trends and cannot see any strong direction. Production is smaller this year but exports are not great either. My bet is that cotton will be within 80 and 100 cents for coming months.

    Soybeans - I am shorting soybeans. Brazil crop is huge no matter recent downgrades. Seasonally, prices rise till late February and pacify in March when Brazil crop comes to market. I believe that up to end of April market has no potential for growth.

    Gasoline - usually prices for gasoline grow in spring. Withdrawal of gasoline are strong. USA now net exporter of finished petroleum products. I do not foresee prices dropping below 2.60-2.70. That's level I sold puts. I do not have any feeling for upper price level.

    Coffee - coffee price is above $2.00. Price doubled within several weeks on Brazil drought. At the same time there are no confirmations about crop damage. Market is filled with talks and fears. Rains came to coffee growing regions of Brazil so they may be game changing. Historically, Feb-March are periods of high prices and starting from there prices slowly go down. I am shorting coffee.

    Natural Gas - it looks like bull party is over. There are few heating days left and soon market will see growth in inventories. Interesting fact - last week Baken rigs count added 23 rigs. Half of them oil, other - natgas. But I prefer to look at total number as according to some estimate about half of all the natgas comes as by-product from oil rigs. I am thinking to open shorts here.

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