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Agricultural Commodities Ripping! Food Prices to Rise in 2021!Ending my posts of major themes to look for in 2021, I want to end with the agricultural commodities. Particularly Corn, Wheat and Soybeans. The agricultural commodities are some of my favorite assets to trade, and I do not think many people pay too much attention to them. I focus on the three mentioned above, but you can also trade sugar, coffee, cocoa, orange juice (yes seriously), cattle, hogs, and pork bellies to name a few more. Let me give you a quick run down on the ag commodities. Corn is the most traded agricultural commodity, and is an important food source for both humans and animals. What makes Corn important is that it can be grown in a variety of climates and conditions, unlike the other agricultural commodities. Other uses include starches, corn oil and fuel ethanol. According to my handy dandy commodity handbook, approximately 35 million hectares are used exclusively for corn production world wide. Just as Oil has different qualities (Brent, West Texas, Canadian West etc), Corn does as well. There are different grades but the most important are high grade number 2 corn and number 3 yellow corn. The futures ticker for corn contracts is ZC. The top 5 producers of Corn in the world are: The United States, China, Brazil, Mexico and India (Canada makes it in 9th place). Corn has had an amazing run since June. We will get to the why when at the end of this post, but pay attention to the commodity charts. These are all going to be LONG term weekly charts. You can see that Corn is breaking out, and in fact, will confirm a breakout with this weeks close, which occurs today. Lot of room higher to go in 2021. The breakout zone will be our support, and as long as we remain above, Corn moves higher. Wheat is the second most produced agricultural commodity. Rice comes in at third for those that are interested. No country necessarily dominates wheat production a la Saudi Arabia with Oil and Kazakhstan with Uranium. China, India, Russia, the United States, and France produce the most wheat in the millions of tons. Canada, Australia, Germany, Pakistan, and Ukraine also boast significant production. The future contract ticker for Wheat is ZW. Wheat on the weekly is setting up to breakout. Just like Corn, we would confirm a breakout on the weekly chart by the end of today. Finally, Soybeans. Perhaps the more ‘mainstream’ financial media agricultural commodity that has seen plenty of coverage due to the US-China trade deal. Part of the phase 1 deal was for China to increase their purchases of US Soybeans. I am focusing on the the whole soybean, but most soybeans are used for soybean oil and soybean meal. The United States dominates the Soybean market, composing 50% of the total global production. Brazil comes in second at around 20%. Many analysts predicted Brazil to be the big winner in a US-China trade war spat, as China could look to Brazil for more Soybean exports. The futures contract for Soybeans is ZS. Let’s take a look at the other traded forms of soybeans which have their own futures ticker. Soybean Oil is a vegetable oil and is one of the most used culinary oil in the world. Soybean Oil is also popular as a biodiesel. Believe it or not, but there are cars that have engines which can convert from regular diesel to Soybean Oil during production. They are known as ‘frybrids’. The futures ticker for Soybean Oil is ZL. Soybean Meal is a quick one. Whatever is left from the extraction of Soybeans into Soybean Oil can be converted into Soybean Meal. This is used for high-protein, high-energy food for feedstock for cattle, hogs, and poultry. The futures contract for Soybean Meal is ZM. Soybeans have been ripping in 2020. Again, China demand and the US-China Trade war headlines play a large part, but there was some other factors which we will discuss soon. Just like Corn and Wheat, Soybeans is set to confirm yet another breakout with a weekly candle close today. The agricultural commodities do not get the attention they deserve, and as you can see, they have made huge moves. For traders, they present a great trade opportunity due to the volatility, but also add on some more risk. Consider at least watching them if you do not want to trade them. M readers know I am extremely bullish on the agricultural commodities and agriculture in general. Jim Rogers is the one who got me excited about this sector. His argument is that most young people do not want to become farmers anymore, and that the average age of farmers is well above 60. Governments may need to create larger incentives to get young people to take up farming. I see some issues and challenges for agriculture, but will be rectified by human ingenuity. The first issue is soil. A lot of soil sucks due to the pesticides and other chemicals we use. If the soil is not great, the crop will not have the full dose of nutrients and could lead to health issues down the road. As many of you are aware, the organic food movement is a huge trend, and will grow year by year. Soil replenishment will be big. I have head some things in the past about zinc being used to replenish soil, particularly in California. Phosphorus and Potash also come in mind. In fact, some foresee a phosphorus faming crisis. A big issue for farming has been climate change. Obviously farming is cyclical. Winter has been lingering longer, especially on the East Coast. Farmers tend to await for certain birds to return to let them know Spring is here and it is time to plant crops. But Spring has been coming later while Winter lingers longer. Climate change will continue to disrupt agriculture and this could lead to a shortage of crops. In fact, this is the primary reason for the spike in Corn and Soybeans this year. Iowa is where the majority of these crops are grown in the US. Millions of acres were destroyed due to the storm in Iowa in August. This has led to spikes in agricultural commodities, and some say, points to a food crisis in 2021. Finally, something not many people consider are the ramifications of green energy. This info I learned from Peter Zeihan’s book, “Disunited Nations“. Highly recommended for anyone with an interest in geopolitics and where the world is going in the future. Green energy is coming. We all know it. Governments will be spending a lot for green infrastructure. Due to the fiscal policy required to combat covid, taxes need to go up. The best way is through green taxes because they know the people will not complain. Government will say these taxes are going to be used for green infrastructure which will aid in an economic recovery and creating jobs. The issue, as Mr. Zeihan states, is that solar panels and wind turbines need to be put in areas that are very sunny and/or windy. These areas tend to be where the best agricultural land is situated. So nations would have to sacrifice agriculture for energy. In his book, Zeihan states that there only a few nations which can come out as winners in this predicament. China is not one of them. Do not panic, a lot of these issues can be remedied. In house and Greenhouse farming can be a way to cope with the effects of climate change and unpredictable weather patterns. Vertical integrated farming can be a solution to allow for green energy infrastructure to be built in the best agriculture lands, and can also be a solution for nations that do not have much agricultural lands. So yes there will be issues, but human ingenuity will get us through it. The question is how long will it take? I want to end of with Covid. It seems we are setting up for a food crisis next year. Tons of articles about supply chain disruptions due to covid and worsening food insecurity for many nations. If this winter turns out to be a dark winter due to covid cases, the likelihood of empty shelves increases. A lot of this could also have an impact on the prices of agricultural commodities. Canada is already preparing for this. In Canada’s Food Price Report 2021, bread, meat and vegetable prices are set to rise between 3-5% in 2021. The average Canadian family will pay up to $700 more for food in 2021. The agricultural charts are pointing to higher food prices. Covid and Climate will have impacts, and hence why I am bullish on this sector going forward.
OANDA:CORNUSDLong
by Uncharted-FX
CME CBOT:ZW Wheat Futures prices forecast, Buy, Target 951Chicago SRW Wheat Futures (CME CBOT: ZW) Trade : Buy Entry : 602 Target : 951 (349, +57.97%) Stop : 557 (-45, -7.48%) Posted on Saturday, December 12, 2020 Note : As I said before, we need to pay attention to grain prices. It seems that the wheat futures prices are ready for a big move. Wheat futures are on the upward trend. It's time to buy wheat. The next targets could be 685 and 951. The support could be 555. If wheat prices secure 950 level and the market is strong, the price of wheat would soar much higher than people can imagine. In the future, the suffering of the poor from rising grain prices will become even more serious. I hope everyone on earth live well together.
CBOT:ZW1!Long
by Ptrade
Buy Signal: 601'6Signal comes from our model- Geometric Markov Model : In probability theory, a Markov model is a stochastic model used to predict randomly changing systems. Markov Models are used in all aspects of life from Google search to daily weather forecast. The randomly changing systems we focus on are the equity, futures, and forex markets. The geometric element of the model is the fractal wave structure you can find on any chart you look at across any market and across all time dimensions. Our model focuses on the current wave formation (current state)- geometric price formation along with its volume and volatility over a given time period and using that information to predict the future state- future price movement.
CBOT:ZW1!Long
by IngenuityTrading
10 million Intermarket Spreads index ETF commodities etc / Hello New strategy spread. I made my initial deposit to 10 M. I was losing big money on 1 M and i thought on a scale i was trading i should add up some money on the deposit. For 10 M i trade 5000 SP and 500 DOW. For 1 M capital it should be 500 and 50 respectively and so on. It is safer. SP vs DOW. I put orders every 10 points in sp and evry 100 points in dow. lets see.. Update ONLY - Intermarket Spreads index ETF commodities etc / I Believe the sp vs DOW spread is the most profitbale for me at the moment. I will stick with it. 10 million Intermarket Spreads index ETF commodities etc / Thank you. Opening balance 25 june 2020 13 736 029 $ Closing balance 10 july 2020 13 790 860$ increase of +/- 54.000 $ I traded the EURHKD vs CHFHKD + AUDUSD vs NZDUSD . It has been less volatile than indices IMHO. I will trade bigger size and i stress less. THank you ! MAX Drawdown -10% adjusted today. Mar/2020 11.82% Feb/2020 31.94% Jan/2020 4.51% Dec/2019 1.23% Nov/2019 5.46% The way i get my numbers of unit is DOW / SP500 = 28622/3265 = 8.77 but i am biased SP. In fact i should be 9 SP and 1 DOW. BE patient is IMPORTANT. This result took me a few days. Please remember. I always spread..... Except when i am not 8-) My point is , in the SPY vs DIA for example i spread all the time and i add until it is profitable. I add once or twice per day, no more. I trade mostly SPY vs DIA vs QQQ WHEAT vs CORN others when opportunities arise. That s it. The simpler the better. Have a good week. Patience is the key IMHO. All in light size. I will trade more spread in ETF PAIRS. Employing an ETF pairs strategy may be useful when there is a disconnect between assets that are usually highly correlated. Sector, country, and index ETFs also provide opportunities for the pairs trader, usually involving going long on a strong ETF and short on a weaker one. It’s important to exit the trades when the assets realign or the trends of strong and weak assets reverse. It would also be wise to set a loss limit on each trade, and realize that markets are dynamic; relationships that existed yesterday may not necessarily exist tomorrow. MRCI encourages all traders to employ appropriate money-management techniques at all times. www.mrci.com This is a site above i use for season trading. Patience is the key. It is important to trade well, not just trade ! Bear in mind i can not trade futures on this platform as i use the minimum service. I recommend the book from MRCI. .LOG RECAP - 15:13 15-Nov-19 I spread-trade mostly. The guy who spreads and makes a little every day is the one who walks away with the big money.” –A veteran trader, quoted in Futures Trade to Trade Well- Not Make Money. www.nasdaq.com Spread positions tend to be less risky than outright long (buy) or short (sell) positions. But not all the time. Always remember, it is not 100% full proof. Mostly WHEAT versus CORN. But others as well. This is a demo. Please read below for understanding. Money managment is important as well as patience etc... I follow more or less the spread strategy with the seasonability strategy - Keith Schap – The Complete Guide to Spread Trading The guy who spreads and makes a little every day is the one who walks away with the big money.” –A veteran trader, quoted in Futures and Toepke, Jerry. "Moore Research Center, Inc." Why Seasonals Work. McGraw-Hill, 14 May 2009. Web. 05 May 2016. Every time i enter a trade in WHEAT i enter a trade in CORN with the same amount of units. Trade accordingly your account size. The trades can last hours, days or weeks. Patience and discipline and money management. I will not lose more than 65% of the equity. I can trade every hour or other. Intercommodity Spread The Intercommodity Spread is a spread between two different commodities, but in the same delivery month. Often this spread will set-up according to seasonality or occasionally a harvest supply/demand picture. The Corn-Wheat Spread The Intercommodity Spread is our focus for today! Specifically, we will analyze the merits of the Corn-Wheat Spread going into the 1st and 2nd quarter of 2011. This is a trade that I have monitored since the 80’s. I believe that it was first notable in the mid 60’s. The beauty of taking a classic trade and reviewing the trends and history of the trade saves time in research and previous observations may even save money on potential variances to watch for. In this particular spread, we note that July may be a strong month for corn as the weather conditions, plantings acreage, export numbers may still be unknown. The crop is still vulnerable until toward harvest which is in the fall. On the other hand, the harvest for the soft red winter wheat may be in July, allowing the market to regard the saturation of a harvested crop. One may look at the months; March, July and September contracts for this particular spread trade and select another, but this is the anatomy of the spread, not to be confused with a trade recommendation. As a matter of fact, this spread may be reversed at another time of the year. June may be a time frame to review the Wheat-Corn Spread. These grains are both feed product and may also be affected by livestock production trends, global supply-demand figures, weather conditions and basis for the farmer. The wheat is typically a heavier protein cereal, while corn does not vary to the extreme. In modern times patents on the seeds of varied grains has become big business. The USDA regulates the delivery, grades and contract size regular for delivery. The seeds and fertilizers must also endure disease and pests. There are Government Subsidy programs as well in some cases to control the crops being planted. In recent times, Africa has been know to lease land for crops to fulfill some of their required grain inventories in countries such as China. Technically, it is good to pull up a spread chart to monitor the merit of the potential move. One may select their Indicators to best confirm an entry. There is no audio in my videos. This is a demo ac. I have a real ac with oanda. .LOG Trading Commodity Seasonal Patterns There is no such thing as a sure thing, but ignoring this chronological behaviour of seasonality and the tools readily available to help predict these patterns is a mistake for futures traders. A knowledgeable broker who is MRCI equipped and spread savvy is a keen idea if you want to get into trading seasonal commodities. The more tools you utilize within using the approach of seasonality trading can help you in whatever commodity or commodities you wish to trade. Trading Commodity Seasonal Patterns Every calendar year there are different seasons. It is how we plan our lives. Weather is the first to come to mind, but there are holidays, sports, shopping and many more that help break up the monotony of our day to day patterns. The commodities market is no different. Just as you use a calendar to plan and differentiate Thanksgiving from Opening Day in baseball, you can use the same calendar to blueprint possibly when wheat futures will be high and copper prices low. Traders can use these seasonal patterns to their advantage because it allows a certain degree of predictability of future price movements, rather than being bombarded by an endless stream of often contradictory market noise. Now of course there are other factors too numerous to list that can affect the futures markets, but certain conditions and events reoccur at annual intervals and help traders anticipate where the market is headed. Seasonality Of Futures Although not 100% accurate-as any weatherman will tell you-weather is, in fact, the chief contributor to seasonal futures trading. The annual cycle from warm to cold weather and then back again affects all the agricultural commodity markets as their supply and demand coincides with the planting and harvesting seasons. However, the annual weather pattern can stretch its power to all the commodities. For example, demand for heating oil typically rises as cold weather approaches but subsides as inventory is filled and decreases even more as the summer months get closer. The calendar not only gives us climate related seasons, but also the annual passing of important dates that then creates 'seasons' of its own. The due date for filing U.S. income taxes is every April 15th. Monetary liquidity may decline as taxes are paid, but rise as the Federal Reserve recirculates funds. These annual cycles in supply and demand give rise to the seasonal price phenomena or what we would simply call seasonality. This annual pattern of changing conditions may cause a more or less well-defined annual pattern of price responses. Seasonality, then, may be defined as a market's natural rhythm-an established tendency for prices to move in the same direction around similar time most years. In a market strongly influenced by annual cycles, seasonal price movement tendencies may become more than just an effect of seasonal cause. It can become so ingrained as to become nearly a fundamental condition in its own right - almost as if the market had a memory of its own. Why? Once consumers, producers, traders, and the like fall into a particular pattern, they tend to rely on it-almost to the point of becoming dependent on it. This dependency can be tricky as such trading patterns do not repeat without fail. The seasonal methodology, as does any other, has its own inherent limitations. For instance , some summers are hotter and dryer than others thus leading to less of a supply than what was predicted for the fall. Even trends of exceptional seasonal consistency are best traded with common sense and caution. A basic familiarity with current seasonality fundamentals and a simple technical indicator will help enhance selectivity and timing of entries and exits. Seasonal Futures Spread Trading The Moore Research Center (MRCI) is one of the leaders in assessing these seasons and has evaluated up to 55 years of history against the market behaviour of current contracts. This research has been used, and still is, by major exchanges like the CME, CBOT and others including hedge funds and traders. They are members and regulated by the Commodity Futures Trading Commission (CFTC) as a Commodity Trading Advisor (CTA). MRCI presents a list of fifteen seasonal futures spread trading ideas each month, covering all commodity sectors: grains, energies, currencies, livestock, etc. Every spread they present has shown at least an 80 percent historic reliability over 15 years (when available) and Moore Research provides detailed statistical data for every year the individual spread has been tracked. Their spread trading cycles last anywhere from a week or so up to around 3 months. Most of them average about 4-6 weeks. Each spread has a pre-determined entry and exit date along with a pre-calculated point at which the spread would be exited if it became a loser. Every spread is updated each day on their web site from the day it goes on to the day it comes off and their results are recorded. MRCI uses the daily settlement prices of the market as the values to label their entry and exit prices. There is no such thing as a sure thing, but ignoring this chronological behaviour of seasonality and the tools readily available to help predict these patterns is a mistake for futures traders. A knowledgeable broker who is MRCI equipped and spread savvy is a keen idea if you want to get into trading seasonal commodities. The more tools you utilize within using the approach of seasonality trading can help you in whatever commodity or commodities you wish to trade. Toepke, Jerry. "Moore Research Center, Inc." Why Seasonals Work. McGraw-Hill, 14 May 2009. Web. 05 May 2016. Disclaimers: * Past results are not necessarily indicative of future results. The risk of loss in futures trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition. ** SEASONAL TENDENCIES ARE A COMPOSITE OF SOME OF THE MORE CONSISTENT COMMODITY FUTURES SEASONALS THAT HAVE OCCURRED OVER THE PAST 15 YEARS. THERE ARE USUALLY UNDERLYING FUNDAMENTAL CIRCUMSTANCES THAT OCCUR ANNUALLY THAT TEND TO CAUSE THE FUTURES MARKETS TO REACT IN A SIMILAR DIRECTIONAL MANNER DURING A CERTAIN CALENDAR PERIOD OF THE YEAR. EVEN IF A SEASONAL TENDENCY OCCURS IN THE FUTURE, IT MAY NOT RESULT IN A PROFITABLE TRANSACTION AS FEES, AND THE TIMING OF THE ENTRY AND LIQUIDATION MAY IMPACT ON THE RESULTS. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT HAS IN THE PAST OR WILL IN THE FUTURE ACHIEVE PROFITS UTILIZING THESE STRATEGIES. NO REPRESENTATION IS BEING MADE THAT PRICE PATTERNS WILL RECUR IN THE FUTURE. The inverse correlation GOLD vs OIL 08:10 05-Sep-19 Gold can be used for speculation but is preferred as a safe haven. Crude, on the other hand, can be used as a store of value but is preferred as a speculative play. This combination makes these two assets work great together as mutual hedges. Gold helps offset the risk of higher uncertainty, while oil can take advantage of market moves. Broadly speaking, you could say that gold and petroleum are inversely correlated. There are a couple of major caveats to add to that notion. The first is that more nuance allows for more sophisticated trading. The second is that there is more to oil prices than just the market. born2invest.com Understanding Intermarket Spreads: Platinum and Gold www.cmegroup.com Basics of Futures Spread Trading March 5, 2011 by Craig Turner www.danielstrading.com .LOG Forex basket Trade the NEWS : For most new traders, the biggest challenge is getting a profitable strategy that works for the long term. Usually, trend-following systems are favored because they tend to have a very good risk-to-reward ratio. Trading the currency market is essentially a numbers game, basically traders look for strategies or systems that have a positive overall yield. The profit factor of any strategy is also very essential, because a profitable strategy should make more money or pips, than it loses. After some extensive research, I have discovered one of such systems. This strategy is built on one of the oldest trading adages around; “cut your losses early and let your profits run” and “the trend is your friend”. Basket trading involves opening a series of correlated or uncorrelated trades, and after an adequate amount of time, closing the trades when the overall sum of the trades is positive i.e. when the net value of all open trades is positive or close to our targeted profit-value. It is not 100% guarantee. The Trading setup The truth behind the Forex market is that currencies trend. This means that currencies have a tendency to keep gaining or diminishing over a long period of time. There are a lot of concepts about trading cycles and swings, but in reality if we were to zoom out of our charts we would notice a very obvious and unmistakable trend direction. Basket trading involves gauging the potential strength or weakness of a pair, and placing several trades that align with that analysis. Key Reports/Factors that Move FX Markets Any world events /news Financial crises and elections create financial uncertainty and, in turn, impact value of a country’s currency Central Bank monetary policy announcements Will affect size/growth rate of a nation’s money supply and, in turn, interest rates; can include key interest rate changes, buying/selling government bonds, reserve requirements changes FOMC (Federal Open Markets Committee) Meets 8 times a year to set U.S. monetary policy and key interest rate changes; impacts value of U.S. dollar, world’s reserve currency U.S. Dollar Index Measures the value of U.S. dollar relative to a basket of currencies for the U.S.’s most significant trading partners.
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by DORMAN5