20 Bucks is Here!

[cottonpicken]

http://www.investors.com/editorial/IBDArticles.asp?artsec=30&issue=20080208

Article says that synthetic trading through options puts the spring wheat value between 20 and 21 dollars!

[parsley]

You did your homework carefully. You pieced together the information. You envisioned a sexy result. You put yourself on the line and made your prediction. Stuck to it. Took awhile, though, until you saw it realized.

Few do. Enjoy it.

Some experience that gut feeling, but in the end, they really have no balls at all.

Be quietly smug.

Parsley

[parsley]

Cotton,

You did your homework carefully. You pieced together the information. You envisioned a sexy result. You put yourself on the line and made your prediction. Stuck to it. Took awhile, though, until you saw it realized.

Few do. Enjoy it.

Some experience that gut feeling, but in the end, they really have no balls at all.

Be quietly smug.

Parsley

[parsley]

Pars, we all did our homework some just don't brag as much!!

[parsley]

I think I told you once before, snappy, good for you for learning that self-discipline early.

cott is only 33, around your age, but we all learn at different rates.

Better than I, who cannot plead youth, because there are some things I never learned.

Parsley

[cottonpicken]

This wasnt meant to be a bragging post.


This is about a very weird situation in the market.I can tell you that traders that know nothing about wheat or farming are talking about the wheat chart blow off.The shear number of limit up days are baffling EVERYONE.

To be fair i never beleived it was going to happen this fast.

All sorts of scenarios are now plausible.Most are not good.

[TOM4CWB]

Snappy,

How true it is!

Pride comes before the _ _ _ _ !

OUCH!

[TOM4CWB]

C.P.

Now comes the 20 M $ Question... what do we do now?

Buy Put options?

Sell Call options?

Wheat, Canola, Black Oil, Bean oil, CDN $!

Now exicution is key!

Is doing nothing... in a once in a life time situation.... an option?

Or is this a shift?

[TOM4CWB]

I actually agree with you CP. We are in a very weird situation. The funny part is most producers don't even understand the importance of yesterdays news.

I was at a meeting last night conversing with other producers, I was just buzzing yesterday, and when I brought the topic up about the wheat, not one of them had heard. The best answer I got was "the pro better go up next month". I agree this is a scary situation.

Tom, I know you addressed CP on the Wheat. My personal take is that wheat is in "blowoff stage". I think this bull will end once those who were caught short, can recapture what they are short. Once those people are filled.... who knows what could happen.

Me personally, I will stay out of Wheat for now, possibly looking at puts or selling the futures at later date. Right now my focus is on Beans, Oats, and Corn. I see the same problem occuring in Corn this Summer, if export sales aren't kept in check. Corn, and Beans have a long way to go in my opinion. And that's not even figuring acre fights just around the corner.

Just my 2 cents.

[cottonpicken]

http://blogs.reuters.com/commodity-corner/2008/02/08/spring-wheat-is-canada-squeezing-bread/

Interview with curt desulik,wheat boards risk management guy on the spring wheat thing.

[chaffmeister]

Utterly fascinating that Roberta would say Curt wouldn't comment on commercially sensitive details about the CWB's position....but then he did exactly that in the answers to her questions.

"We are very confident that we will not be participating in the delivery process for the March futures in Minneapolis"

"We're comfortable with our share of the open interest."

"It’s influenced by a lot of things and I can’t see that our position is a driving factor behind that."

"As a seller, we’d prefer obviously for the market to get to its trading level faster."

That's about as close as you can come to coming right out and saying publicly "We're short March futures" - without actually saying it.

Now, they could be short against unpriced sales - to be liquidated through exchange of futures. If so, they aren't really "caught" short. They would liquidate quite easily as they price sales.

Even so, if he worked for me, making those comments would be a CLM (career limiting move).

Since Jan 25, a total of 6,328 contracts have been exchanged for cash = 31,640,000 bushels (861,093 tonnes).

In the same time period the total open interest has dropped 10,798 contracts = 53,990,000 bushels (1,469,356 tonnes.)

It certainly looks like someone is in trouble, but under the circumstances, it may not take much of a position to drive the market like this.

Anyone remember 1984 June canola? Peaked at $722/t.
Carryout that year was 126,000 tonnes.
Once the shorts were covered.....poof.

[chaffmeister]

I couldn't agree more with you chaff. I expect also that when the shorts are filled, as you said "poof", she's done.

Also note, if you look at the July Beans in 73, same situation happened as we are in right now with the Wheat. Limits were increased, Beans hit $12.90,the shorts got filled and we haven't seen that number ever again until this winter.

I would expect some short term lull in the market, once shorts are covered. This when I will be looking at putting some positions on.