Best Thread Spreads Trading

[CraigSam]

I wasn't sure there was anyone else out there!

I actually got back in to ZCZ3-ZCU3 and ZCZ3-ZCN3 early last week at -.32 and -1.30, respectively, as I liked the price action which appeared to be stable at those levels after the crop progress report turbulence. I sized these two related positions at 3 Z-N to 1 Z-U. The first is pure new crop-old crop, the second new crop-old/new crop as by September delivery some of the southern US corn is ready for delivery.

Now it's a tug of war between old crop demand and prospects for the new crop. Today's action suggested new crop Dec was not in as good a shape as anticipated, with a nice move upwards.

 

[CraigSam]

I use my own tool to analyze spreads a seasonality - SeasonAlgo, you are welcome to try it, if you drop me email after registration, I'll give you free full access trial (demo is limited to corn). And you can use any chart in your posts.

I actually got the idea for the ZC-ZU from SeasonAlgo using the demo about a month ago, so I appreciate the help. You can find my email based on my Trade2Win name. I'd already been in and out of the ZC-ZN spread once before.

 

[CraigSam]

btw: I'm still holding CZ-CU position, I'm very careful with grains after last year summer, so I have started with reduced position. I'm prepared to add to position around -40, almost was there.

You must have started your corn/wheat spreads in the summer. I had a good run in spring, got pounded in early summer, did OK late summer. The spring run overcame the summer losses.

I did just OK with soybeans, meal, and oil last year, with most of the loss coming on two positions where I committed three cardinal sins:

1) Overconfidence as I'd had a good year through May.
2) Got in two correlated soybean positions at fairly high allocations.
3) Went on a traveling vacation in June with sparse Internet connection. I'll bet you can guess what happened to the two correlated soybean positions when I couldn't get internet access for two days! KAPOW, triple my normal risk allocation loss by the time I got internet access!

This year is a very good year for soybeans and products if you're on the right side of the spreads. Old crop soybeans (and soy meal) are in high demand as livestock needing feed is up.

 

[CraigSam]

I sized these two related positions at 3 Z-N to 1 Z-U.

Actually, 3 Z-U to 3 Z-N. Sorry

 

[CraigSam]

Actually, 3 Z-U to 3 Z-N. Sorry

Last correction: 3 Z-U to 1 Z-N. QC is not working properly today.

 

[peparak]

You must have started your corn/wheat spreads in the summer. I had a good run in spring, got pounded in early summer, did OK late summer. The spring run overcame the summer losses.

I did just OK with soybeans, meal, and oil last year, with most of the loss coming on two positions where I committed three cardinal sins:

1) Overconfidence as I'd had a good year through May.
2) Got in two correlated soybean positions at fairly high allocations.
3) Went on a traveling vacation in June with sparse Internet connection. I'll bet you can guess what happened to the two correlated soybean positions when I couldn't get internet access for two days! KAPOW, triple my normal risk allocation loss by the time I got internet access!

This year is a very good year for soybeans and products if you're on the right side of the spreads. Old crop soybeans (and soy meal) are in high demand as livestock needing feed is up.

During the first half of last year I performed really well, I was up around 120% so same mistakes as yours followed - overconfidence, I build too big positions and too many correlated position in S&SM. Plus I had big loss in one RB position. So I gave back in few days most of my profit. But It was priceless lesson, I was able to turn off hope mode and protect my account. Sugar later saved it little bit. Now I'm doing quite OK, I 'm now more strict with my money management.

Will send you more info to your email!

 

[tnerb]

bean and corn spreads

Looking at buying new crop bean spreads (nov/may) and new crop corn spreads(dec/dec). Record us production has bean spreads at a carry, limited risk at 10=15 cents under. Corn carryout back closer to 1 bil bus, should keep corn spreads very firm.

 

[CraigSam]

Your bean spread does look interesting; is in a good seasonal timeframe until early June, near multi-year lows, and looks like it has barely enough volume in the May contract. I wish I had been watching it when it hit -15 a few days ago, as opposed to -11 today. On my watch list, and thanks!

The corn spread seems to be a bit early in the year. The price action a couple years ago in this spread (looking similar to the current year thus far, but with a widowmaking breakdown in July) is a bit scary. Looks like a possible mid-June entry might be better.

I'm not in very many high confidence (to me at least) grains/beans at this point. Just got an entry this morning near 8 in Sep/Jul wheat. In Mar/Jul and Dec/Jul corn, but price action isn't that good at this point in the seasonal timeframes.

Thanks for the post.

 

[tnerb]

Re bean spreads...structure of bean spreads changing with sa production equal to u.s....k/n potentially a new crop spread as s.a. beans become available to chinese(if u.s. does not oversell like they did this year) ...multi year lows in x/k due to forecast for record u.s. bean production...heard that one before....

 

[tnerb]

Craigsam, seems like there is limited discussion on spreads....let's discuss... maybe this discussion can evolve...I have a trading floor background (grains), have traded spreads everyday for most of the past 30 years...use a fundamental approach... have done some crazy things with spreads but they have provided me with a living...started on the floor with $8,000, spreads allowed me to leverage myself, eventually led to a position as a market maker...

 

[r0mannn]

MRCI is very good source of seasonal spread trades