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Grains - Mar 08,2010
Sunday, March 07, 2010
by PitGuru.com Authors of PitGuru.com
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The Grains Pit Review For the week of March 8th, 2010 By PitGuru Matthew Pierce The previous week saw a choppy downside with only bean oil showing any type of sustainable strength. This is the time of spreads, as I have stated in morning broadcasts over the previous couple of weeks and subscribers are well aware that there are plenty of opportunities out there right now. Intra as well as intermarket spreads are going to be my focus heading into the all-important planting report at month end. Flat price has a definite downside bias heading into planting but I feel beans are undervalued if it reaches as low as $9.00 basis May. Both corn and wheat could continue to have a modest downside bias from current levels but wheat is running into support at the bottom end of the range. Meal versus oil is interesting in that the market has mountains of bean oil with crush levels only adding to this problem. There is limited interest in eating into the 3.2 billion lbs of oil making this a weak fundamental situation in spite of the macro support garnered from crude oil. The flip side of this is the uber-bearish meal market. The meal chart is a disaster while the bean oil chart is almost straight up. The obvious bias here would be long meal short oil. The problem with that is the situation in meal, though oversold, is more bearish than anything I can find on the fundamental situation. With Ethanol grinding at an epic pace there are plenty of DDG’s flooding the protein feed market making meal even cheaper as farmers supplant with cheap mid pro DDG. This could offer oilshare the opportunity to widen out to 50% if crude oil continues to hold and/or rally. One way to short oil is buying SK puts while selling SK calls. That would be a play for risk tolerant traders so be aware of risk parameters if looking to trade. More responsible methods of trading right now promote buying beans on the dip looking for a historically-backed rally through planting. I am also looking at SK calls on the cheap with volatility sitting on either side of 25%. This is quite low as compared with corn at 29% and wheat at 33%. I like owning beans on the dip, owning wheat versus corn at current levels and bear spreading corn. Subscribers can see my plays via the morning wires. Overall the market is looking for information from Wednesday’s WASDE report with S. American production totals the biggest numbers of interest. Following this the trade has to decide about weather, S. American finishing production and Chinese demand before planting this all important crop in April and May. No weather concerns are seen either here or S. America so look to macros and WASDE for best direction this week. 
***chart courtesy Gecko Software’s Track n’ Trade Pro Past performance is not necessarily indicative of future results.
Recent articles from this author
- PitGuru.com's Grains Analysis: Feb 06, 2012 - Sunday, February 05, 2012
- PitGuru.com's Grains Analysis: Jan 03, 2012 - Monday, January 02, 2012
- PitGuru.com's Grains Analysis: Dec 19, 2011 - Sunday, December 18, 2011
- PitGuru.com's Softs Analysis: Dec 19, 2011 - Sunday, December 18, 2011
- PitGuru.com's Energies Analysis: Dec 19, 2011 - Sunday, December 18, 2011
About the author
Daniel Cronin - PitGuru.com's Energies & Metals Guru Daniel Cronin has spent years on the floor of the Nymex as part of one of the largest energy floor brokerages in the business. His extensive experience stems from not only his Pit background but also through intense studying and implementation of complex technical analysis and market trading techniques via the mentorship of the now retired Ralph Acampora. Mr. Cronin brings subscribers a rare combination of book smarts and real world trading experience in one of the most volatile market sectors in the futures industry. Matthew Pierce - PitGuru.com's Grains Guru Mr. Pierce is a unique acquisition for Futures Press Inc. in that he has an unmatched level of real hands-on experience within the industry in addition to his floor trading expertise and top notch education at the University of Illinois College of Agriculture. Matthew has literally cultivated the perfect professional career as a grain expert by working with the industry's most recognizable companies such as Cargill, LaSalle Group, Conagra, Walsh Trading Inc. and many more. In addition to trading on the floor of the Chicago Board of Trade, Mr. Pierce writes what many in the business believe to be the best kept secret amongst trading reports available in the industry. Jurgens H. Bauer - PitGuru.com's Softs Guru Jurgens owns and operates his own order execution firm on the ICE trading floor. He has been a member since 1987. His firm, Jurgens Bauer and Associates, specializes in executing option orders for a wide array of customers and a variety of industry participants, including individual speculators, funds and members of the trade. While Jurgens has been an active member of the trading community he has also spent time since 2000 working at raising awareness of environmental commodities, educating industry professionals on emissions trading, brokering transactions between private counter parties and developing SO2 and NOx contracts for the NYMEX. Frank LaMantia - PitGuru.com's Financial Guru Soon to be Dr. LaMantia, Frank is not only one of the most educated traders on Wall Street, but also maintains an industry resume of substance and depth. Frank has worked extensively on an Institutional preferred stock syndicate desk, as a government bond specialist, and as a financial advisor all the while achieving multiple licenses in the finance field. With an extensive and impressive client list (including Citibank, Bear Stearns, Lehman Brothers, AG Edwards, Mesirow, UBS, and numerous Hedge Funds), Mr. LaMantia brings his one-of-a-kind background to his current occupation of full time trader.
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