yea Shaqi...I'm hoping Cattle get up into the 96-97 area (Dec Live), I'm currently long that contract and want to reverse at that level. Waiting to pounce on feeders as well, unfortunately it looks as though they have better strength than the live cattle. Seasonal trade is lower on the feeders, but a lot of contra-seasonal trade has been occuring of late with the financial market following. Agreed on the hogs...Dec doesn't have much more room to fall looking at the weekly chart, I do think the bellies have a lot of down room though...nice little descending triangle on the daily continuous chart.
sold my long positions in Dec LC today, then took a half position short at 94. I think we may see a pullback, then a runup to fill the gap. Did spread some Jan feeders over Dec fats as well at around 6.25.
Ok...this is completely against the seasonal trade, but today I bought the Feb/June lean hog spread. Bought it at -18.65 Bought the Feb at 61.35 and sold the June at 80.00 My thinking is that this spread is just a bit overextended...looking back I don't think I've ever seen it this high...normally I do the reverse of this spread at this time of the year...but this year just feels different...the whole contango mkt structure and all.
Trader TX Interesting you should say that. New to meat spreads here and was actually looking to buy into that same spread. Based on seasonality. Any particular reason for selling it? A general question for all, what meat spreads would you suggest a newbie stick too or stay away from?
nobody is feeding old cows right now, they are going straight to slaughter. Beef production is going to be toned down alot imo, i am looking at apr/jun 09 live cattle. A guy could probably buy live sell fats too.
Manin: You are correct, the seasonal trade is shaping up for buying this spread...I'm just thinking it heads a bit lower from here, these are historical highs here, but I'm also not playing it with size, only a 5 lot, and with a tight stop. As far as recommended spreads, personally I have always liked lean hog spreads, mostly b/c once they get rolling they usually trend for a while, just like the futures contracts. My second favorite is feeder/live cattle, and then live cattle/bellies, but getting a fill on that one is a whole other accomplishment in itself.
Trader, thanks for the reply. I will definately give them a closer look. What is volume like outside the Floor hours?
Thin...if you're going to trade after RTH, stick to live cattle or lean hogs, nearby month only, unless dealing with limit orders that you carry over from the pit session. I have gotten limit orders filled on the Globex that didn't get hit in the pit the next day, but just keep size small and use limits...