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Elgrey
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Expat finance professional living and working in Hong Kong.
  • El Nino Further Impact

    A few weeks ago I wrote on how commodities react on El Nino during early stages - summer. Now I want to cover next stage - next 4 months up to the end of December. As before only 4 years - 1982, 1986, 1997, and 2009 will be reviewed and the precautions against results need to be the same - remember, this is a small selection for statistical purposes, expiration bias is possible, past performance is not indicative blahblah and so on...

    OK, results:

    Grains - wheat and corn declined and rose equal number of times. Soybean group (beans, meal, oil) rose 3 time vs 1 decline. I'd say this is rather neutral result. However, assuming this year's drastic drop of beans I do not rule out that the score will be 4vs1 in near future.

    Softs - cotton and cocoa made 3 declines vs 1 growth, coffee was even, orange juice was 3 times green and 1 time red.

    Petroleum group and natgas were even. Metals too.

    Conclusion - there is no clear impact no matter what crowd thinks. One more proof to abandon herd mentality and use own brain.

    Jul 15 4:42 AM | Link | Comment!
  • 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!
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