My apologies for skipping May. If only I could load it anew like a saved computer game. Well, what done is done. My big misfortunes were cocoa and hogs - both continued rallies against me and I was taking pain waiting for reversal to quit positions. I managed to do so in hogs without much damage but cocoa drained plenty of my blood. I did not expect so much resistance from bulls but there was the whole chain of misfortunes - first grinders did not confirm drastic drop in demand, next came trustworthy data from researchers about falling production in Ghana. Then after markets digested it and started strong reversal, there was Ghana COCOBOD who came out confirming the researchers figures and markets spiked again. This third move confirmed that market is using any excuse to move higher no mater what - news about good weather in Ivory Coast and good production numbers from them were ignored completely. Plus there started to come worring whispers about slowing Ivory Coast arrivals (not yet confirmed) and dollar weakness continued. This market will reverse but when? Timing is a big question for a derivatives trader, I had two options - roll and sit waiting for reversal or take pain and release arrested margin and trade elsewhere. I chose the latter. Do not know how long this rally is going to take, cocoa market can be cornered because of its small size plus we will have more certainty only after realistic production and demand numbers come which is not going to happen this or next week.
OK, enough of self-castigation. In June-July I am looking at:
Wheat, Corn - I have been selling rallies. Sawings, conditions, export sales - everything is in favor bears. But - funds are very much short this market so should they unwind - the damage may be harsh. Therefore I do not have a big heart to have large positions.
Soy Oil - I am shorting this market. Seasonals are very supportive. There was a strong spike in prices after proposed legislation on bio-fuels and market reaction was too much and too fast. I have a feeling that market will sell this rally.
Coffee - again stocks, weather, seasonals are bearish here which makes me a bit worried (enjoy it while it lasts cause it never does) so I'd rather sell rallies carefully.
Natural Gas - same as coffee with the exception that today I have no position but looking for a selling opportunity which is a possibility right now.
I am interested to see developments in soy and cotton markets but I am on the sides cause fundamentals do not provide me comfort in either direction.
This is it for June and July. Stay tuned.