Jim Rogers (Rogers Raw Material Fund) is wildly bullish on commodities long term (the next 5-10 years). Coffee and OJ are among the few commodities still near multi year lows. Unless people stop drinking coffee and OJ, we're near some sort of temporary bottom. Coffee is forming an excellent 3 1/2 year basing pattern below 80 cents. Any predictions on these markets for the next few years?
Florida OJ growers are starting a massive ad campaign in an attempt to boost prices. I understand some coffee growers have been throwing in the towel as of several months ago. Not much insight but those could be events which help the products bottom. They are both pretty cheap imo, but unless something happens to reverse the trends they will get cheaper. What's gonna unlock the value?
As an aside, does anyone here (Blue Horseshoe) have any advice on selling options on these futures? I know nothing about futures options but am intrigued by the idea.
I traded in soft options and currently the vols in OJ are a multi year lows. There are but 5 locals in the pit in the non-frost months. For 5 days I was the 6th option local but I don't like to see paint dry so I left. Very slow there lately, if you must put on a position, you better have a conviction and a long time frame > 2 weeks coz it will cost you to get in/out. Coffee and sugar are also at lows long-term and those two pits are VERY liquid.
I've been selling Coffee puts consistently for the past few months. Only advice is you might stick to expiration months as spreads in the other months are expensive. Reitberg had some option ideas ... you might check some earlier threads. Run a search here on "Coffee" and "OJ."
Where do you guys trade Coffee & OJ? I have an account with IB but was under the impression that I cannot trade those commodities with them since they are not traded electronically... Thanks
Other than some emini pdocucts such as gold,there really is no way to trade the ag options other than finding abroker who has floor business and calling in your orders. ONe can only wish....
Check out a 30 year chart of OJ and Coffee: http://www.mrci.com/pdf/charts.asp This is as close to a bottom as you're going to find in any major commodity. Looks beautiful for the next 3-5 years.
for a long term play of say 2-5 years, how do you go abouts getting into a position that long. Do you have to manually roll over the position or will a broker do that automatically. What is the cost of carrying a position that long? So for instance, on a liquid commodity like Crude Oil, say I wish to go short for a 2-5 yr time frame. How would I do that? I apologize for the newbie question.
If you wish to have a LT position, you may want to just buy the far out contract and roll once in a while. Rolls are done regularyl by the "trade" and if you are on the wrong side of it, you will get bad prices since the contra-party-i.e. locals will squeeze. I am not sure if they have leaps in futures. Or you can always wait for volatile periods and sell options. The issue then comes to margin. For example, if you buy an OJ contract, you might need to shell out $300 / contract which is locked in for your holding period. however, you can use Tbills for margin, I believe. Contact the ed services of the exchange so they can direct you to proper literature.