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Elgrey
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Expat finance professional living and working in Hong Kong.
  • A Brief Addon To July-14 Strategy

    A brief update. I closed my short position in Cocoa before grind reports. The major one - EU grind report was released last week showed 10% drop in grind numbers. This number can be corrected later but this is alot for a year of "looming global deficit". So demand is no longer that hungry beast. Plus preliminary news are good about coming main crop and no bad news about midcrop. I re-opened short position for next 2-3 months. If you are more risk averse then wait for another couple of weeks - US and Asia reports will be out soon. But remember - EU's is the major one.

    Jul 14 2:51 AM | Link | Comment!
  • My June-14 Strategy Review

    A quick review of June:

    Soybeans - finally market cracked but the story is far from over.

    Soy oil - we had a brief rally before Ramadan began and now market is in sell mode again.

    Cotton - this market melted like snow in June. I quit my position to book the profit and looking for a bump to jump-in again.

    Coffee - bear's party is not finished yet. Stay short. At this moment they gather beans from frost-damaged plants first and there are no bullish news. So the picture should be even more bearish once they get to healthy coffee plants.

    Cocoa - this market did not go down so I was wrong. At the same time I did not lose - my short calls were still out-of-the-money and I bought them back at discount and closed position with minimal profit. See how options allow you to earn even if you are wrong. Fantastic game. Now, back to the point - cocoa is no longer short as Ivory Coast and Ghana receive too much rain. This can be a trouble for coming autumn crops. Also, another reason why I quit position is upcoming cocoa grind reports from US, EU, and Asia.

    Natural Gas - this baby was down in June but I am a bit worried if this move is sustainable.

    Gasoline - I did not mention it in previous post because I did not have a position at that time. I am short gasoline from 20th of June or so. I was thinking about shorting gasoline but I was not sure (a) when, and (b) why. Technically speaking the market went too overbought without strong fundamental reasons - every week petroleum report shows inflows despite it is a high season for gasoline. The market was fueled by worries about Iraq crisis but this (for now) did not prove to be anything of long-term nature. So, on the day when Iraqi rebels captured one of the biggest oil plants in Iraq and the market did not react any more I made my move, bulls tired up.

    Corn - I am a long-term bear here but I have no position yet as I am still wasting time looking for an entry point.

    Heating Oil - waiting for another 10 cents drop to open a bullish position.

    Jul 01 9:23 PM | Link | Comment!
  • My June, July-14 Strategy

    Summer is here with us. Warm beer, sweaty girls... You know, summer))) OK, plans for rest of June and July.

    Soybeans - short, short, short. Re-established shorts right after WASDE. The price is way too high, crops are abundant, weather is fine.

    Soy oil - continue shorting as seasonals and fundamentals are bearish.

    Cotton - shorting here too! I need to justify my logo after all! But seriously speaking, reasons are the same as with soy - seasonal trend, abundant stocks, good crop condition.

    Cocoa - I had strangle position meaning that I was shorting calls and puts simultaneously. This means I would benefit if the price would be below call strike and above put strike. I closed put leg when prices rallied to 33 months highs and put became very cheap but still long way before expiring. So now with just short calls left in portfolio, I am effectively short cocoa and I continue shorting this market because no matter recent price rally I do not believe it is real - fundamentals are slightly bearish - very good main and mid crops in Africa overweight fears of deficit. You know, deficit is still at "maybe" status but good crops are facts. Buy the rumor, sell the fact. And a few hours ago prices declined strongly, and I think this is only the beginning.

    Coffee - as long as harvesting is on its way in Brazil I am shorting coffee market.

    Natural gas - inventories are being re-built, El Nino promises a mild summer - I am bear and I plan to remain such until August unless something bad happens.

    Heating Oil - I closed my bearish position the first day markets reacted to tensions in Iraq and saved most of my profit. I had plans to wait until prices drop to close my bearish stance and build bullish position for next few months but markets are unpredictable and they rallied without bottoming. Therefore I will wait. Current rally is not a long-term one, it may crack any moment as it is driven by politics not supply and demand. If you like to ride crazy waves - it is up to you but I prefer to make money with cold head and without nerves and hassle. So I am waiting.

    Corn - coming weeks will be very important as corn pollination begins. I do not expect big surprises here but I better wait before building bearish position. Also, I want to see a technical bump before doing so.

    Jun 13 12:03 AM | Link | Comment!
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