Long OJ U/X/F butterfly @ -0.55. - Quite low. -Weird curve for the season. - Hurricane lottery ticket.
Hello Again. I want to tell, that exist these news: http://english.vietnamnet.vn/fms/wo...h-wales-drought-now-affects-entire-state.html Kind Regards, George.
Long ZM Q19/U19 @ 0.3. -US/China Trade war may increase demand in soymeal during the coming season. Oil World says China will have to turn to US supplies of soybeans soon, but they may as well start importing more soymeal ( from Argentina most likely )instead of crushing it at home. - Low historically.
Hello Again. I want right now to speak for a Magazine. From that Magazine: Hay & Forage Grower, someone can see prices of hay: https://hayandforage.com/articles.sec-7-1-Markets.html Kind Regards, George.
Following friday's debacle, MW has lost ground to Feed wheat. It's pretty much back to my entry price at 18$/T premium feed wheat.
Went Long KW H19/K19 @ -12. -Near historical full carry( but VSR now ) -Near H18/K18 levels whereas Stocks to use is much smaller this year -12% + protein will be in shortage at the end of the season -Contango too deep compared to May/Jul19 intercrop spread
If you wanted to hedge the curvature risk on this spread, how would you do it? Options or another futures spread?
The shape of H/K is directly linked to the "jump" between K old crop and N new crop. The bigger the jump is, the more you are likely to see H/K flat or even inverted, independently from the level of actual stocks. On the other side, Z/H is purely a storage and stocks play, so IMO the most straightforward way to eliminate the curvature risk is to make a +H-2*K+N butterfly. The risk is that the intercrop spread get even bigger because of the current shape of wheat crops around the globe( Think Russia, Australia, Germany ), but they are close to being fully harvested and wheat is already expensive. So it might be a good idea. I chose to simply do the H/K because it is close to historical carry( VSR can go further but...) and the world will lack 12% protein soon ( according to a "physical" friend ). I don't trade options, so I don't know if there are some better way to hedge using them.