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Elgrey
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Expat finance professional living and working in Hong Kong.
  • My May-14 (And A Bit Further) Strategy 0 comments
    May 5, 2014 11:48 PM

    There was no article on April for one reason - I reviewed my approach towards investing business and left shorter-term trading in favor of longer-term strategies. My trades were seldom longer than a month before. Now I take positions for 2-3 months. Therefore writing an article every month is not relevant anymore. Instead I will be doing that on uneven periods basis.

    Soybeans - at the moment I hold short position consisting of OTM August calls. I still expect soybeans to fall bearing in mind (a) extreme crop in South America, (b) imported beans coming to the US, (c) extremely long position of speculators, (d) looming El Nino which brings wetter conditions to the US in summer. On the resistance side there is shortage of beans in the US warehouses but this is no longer news and was factored into the price already.

    Cotton - I held strangle position but I do not rule out to close it as CT market keeps on crawling up. But this market is unpredictable and is highly dependent on several large players who can turn it upside down within hours.

    Coffee - fears of loss of crop weakened after Brazil received needed precipitation. I am under impression that the price gone up too much and increased my short position waiting for the pullback to 170-180.

    Cocoa - I re-instated strangle position soon after major grind reports were issued. Quarter-on-quarter grind data has weakened a bit in EU and Asia but added in the US. Same period last year grinds are stronger all over the World. Midcrop is promising but El Nino is a potential threat for Ivory Coast. Technically, bulls are very weak. Bottomline - market is under pressure of different factors and I want to hold a non-directional position until early July when new grind reports come live.

    Heating Oil - there is not much to heat in summer and I short HO.

    Gasoline - I was long RBOB back in March. I transformed my position into a non-directional strangle in April. In May I am shorting RBOB. These are seasonal trends and technical factors that influence my decision.

    Natural Gas - I was shorting it but I was caught unprepared in mid-April when prices spiked after pitiful weekly injections. Now situation calmed and I hope that injections will normalize and we see NG slowly giving up its positions. I am shorting NG.

    I suggest to stay away from Wheat and Corn as these two are at gambling state at the moment - July will tells us if corn pollination went well and at that time we will have more info about wheat crop. Plus, important factor is situation in Ukraine. If conflict continues to escalate the conflict then there could be less supply of wheat and corn, especially wheat. I am interested in buying copper but I do not want to buy futures and unfortunately options market is very thin for this commodity so I am still thinking.

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