Not much on the bean spread, but I've been watching and trading the cz10-cz11 and cn11-cz11 which are pushing 60 and 70 inverse also. Take a look at what the h11-n11 wheat spread has done this summer too. These spreads can really fly but I've always had a tendency to short them when they get out of control like this small enough that I don't have to be too precise. You can start with mini's if you're fees are low enough. Didn't the sn/sx go to like $3 in 08?
'08 brings back some bad bean spread memories. Bought sn09/sx09 beans around Christmas for a couple of reasons. Carryover was approaching 200, and I wanted something on during the holidays that I wasn't going to have to watch too closely. Bought the spread at around even money (risk/reward?) and got out just before the Jan usda report with maybe a $5000 profit. Anyways, with in two days the spread is at 50 over and never looks back. So I get mad and buy the X09/x10 at about 25-30 under, the idea being that small acres in 09 is not going to alleviate a tight carryout. The X09/n10 narrows to about even money and I sell it (risk/reward) leaving me with the n10/x10 somewhere around even money. eventually I sell the n10/x10 around 50 over and made some money. Regards,local
This was my beans 2008 chart. it was a good bullspread and the pattern similiarity to 2006. I didnt get in, which i should have. I dont remember why. Edit. I remember why, the beans/corn ratio did not break below 2.00. if u look at the purple line, it was above 2.00.
Seems like any time you got a crack at these near full carry, they could be nice risk/reward setup going forward, especially if you can get them 2-3 years out. Thanks for the chart on that.
Guys, I've been watching the N/X bean spread for the pst 6 months and it just won't break. Tells me a couple of things. Trade is concerned about unrelenting demand from China and as a result tightening of stocks. Commercials appear to be on the long side of spreads, specs/funds don't have what it takes to invert this spread. This fall is differnt from last as market last yeear was anticipating large S.A. crop and some relief in terms of build up of stocks. This fall is a little different since dryness is creeping in to the sa weather forecasts and sa production is uncertain. Expect large sales tomorrow, further support of spreads. If I was an economist I would describe demand as being inelastic. happy trading. Regards, local
July/nov beans (n/x)trading at 81. dec 10/ dec 11 corn trading at 42 over and going nowhere. Not too late to get into the beans. Nobody trading spreads? If not how do formulate value for nearbys ? Just curious. Regards, local
The Dec 10/Dec 11 Corn spread has sagged down into the gap area that was left after the last USDA report. Monday's 5 1/2 cent slide does not look very bullish. Any idea why Dec 10/Dec 11 Corn spread can't seem to rally?
I looked at spreads about a month ago when I saw the intellectual dialogue on here. I appreciate your insight. You seem to really know your stuff. I have not traded any spreads yet but it's something I'm definitely interested in. I did load some charts and watch how they perform. I generally just trade based on news, sentiments, etc. It's fun. Thanks for all the insight you provide.
When I traded as a local, there was always time to bs with the other guys in the pit. I miss that with electronic trading, so this is a bit of an outlet. This is a tough way to make a living, so I respect all that try. Less respect for the scammers and those who do not reply respectfully. Anyways back to spreads, I believe that having a basic fundamental approach to spreads will make you a better trader, including being able to formulate an understanding of flat prices. Let me tell you a grain trading story to get my point across. Several years ago, Jim Rogers (the guy with the funny bowtie) initiates a long position in a contract that I have traded on and off for the last 25 years. He is trading a fund of hundreds of millions, maybe billions, and wants to own commodities. His theory is sound, China is going to increase demand etc. Anyways he ends up owning half the open interest. Now I know from the specifications of this contract that he can't stand for delivery (very restrictive position limits for delivery month) so I short the spreads because I know he is going to sell them back to me at full carry when he rolls hhis position. I do this for about five years, every delivery month, works like clockwork. Eventually, Rogers gives up, liquidates his long position and loses significant capital simply because he doesn't know the specifications of the contract and how it would affect the spreads. He may have established the long position for the right reasons but didn't understand how a spread would work against his theory. regards,local.