Big move in Wheat

Discussion in 'Ag Futures' started by HooLee, May 9, 2003.

  1. HooLee


    July Wheat moved from 302 to 322 in last 30 min of trading today, that's $1000 per contract. What happened?
  2. Beans and Cattle also move up sharply in the afternoon trading.
  3. HooLee


    Yes, but the bigest move is in Wheat. I am long in Corn and Beans, but NOT Wheat! :mad:

    Why is the sharp move?
  4. JayS


    Its a move ahead of the USDA data coming out Monday morning.
  5. Swipe


    eat more wheat

  6. HooLee


    LOL, I usually don't have breakfast, but happen to eat bread this morning! That's why!

    Big guys know something we dont know, as always. Small potato like myself can only put on a trade and feel lucky, sometimes. :)
  7. Wow beautiful. Classic pattern though . Wish I had seen this . But can you trade the mini electronically?

  8. 6/25 Wheat

  9. Markus


    That's a fantastic move if you were long Wheat. But what, if you would have been short Wheat? That may sound strange, but maybe you are trading reversal bars; you saw one yesterday and decided to go short...?

    GoldTrader's Chart illustrates a good point: How to reduce risk trading spreads.

    Wheat moved more than 20 points today; the spread KWN3-WN3 just 4 points.

    Here is a quote from Joe Ross' book Trading Spreads and Seasonals:

    Reducing the Risk of Holding a Position

    "It is not uncommon in liquid or illiquid markets for a floor trader to hedge his position by “spreading off” against the same market in another month, or against a related market in the same month. I have seen this kind of floor trading tactic in such illiquid markets as the Value Line, and even in more liquid markets such as Soybeans, Eurodollars, and Bonds. In fact, arbitraging through spreads in distant back months by financial traders is commonly done while greatly reducing risk. If floor traders think it’s important to “spread off,” don’t you think it’s important for you to do the same thing?

    "Value Line floor traders, in an effort to make a market, will take the opposite side of an entry order coming in from off the floor. Then, because volume and liquidity are so terribly low in this market, the Value Line floor trader will offset his position by taking an opposite position in the S&P 500. By doing so, he has hedged his risk. It is not uncommon for a floor trader in the Soybean pit to offset and hedge his risk by taking an opposite equity position in Soybean Oil or Soybean Meal.

    "Financial floor traders will hedge risk by spreading intermarket contracts and intramarket back month contracts. Often these are not perfect spreads and often they are not spreads recognized by the exchange as such. Nevertheless, they are regularly used by floor traders and are illustrative of the use of spreading off as a means to reduce risk and thereby create a hedge.

    "Off-the-floor traders can also hedge risk by use of offsetting positions to be held overnight. Both daytraders and position traders can create spreads that considerably minimize the risk of a position that might be held overnight. Day trades can be converted to position trades by spreading. Position trades can be held considerably longer at less risk by spreading."


    Have a great weekend,