Wt Wheat Discussion Threads

[shavian] 05/9/2009 09:03

I'm groping in the dark a bit myself in this area. Trying to second-guess the commodities market is not for the faint-hearted! All the background factord would seem to indicate that grains are looking over-sold, but one needs to research all sorts of factors like storage trends, weather forecasting etc, and I don't have the time to do this without becoming a complete nerd!

I'm just sitting here waiting to see if/when there's a trend change at which point, I'm in. Another possibility is to make a series of small buys across a period of a couple of months and go away for a year!

Have you also been following natural gas? Check out the NGAS threads, where there is a similar situation, but quite a lot more info from informed posters.

Good luck

[redprince] 01/9/2009 18:37

Shavian-thanks for the input-i am new to these so appreciate any insight on "hidden dangers/minefields" but feel time is rapidly approaching for a buy here!!!Am i missing anything?

Cheers redprince

[shavian] 01/9/2009 17:28

Hi Red, saw your similar post on CORN. Not qualified to answer your Contango question but it would seem that this cannot carry on dropping for ever. El nino, crop failures in Kenya and India, all looking bleak for the developing world, sadly. Seasonality would indicate an upturn shortly. The CORN thread is more useful in looking for indicators in the futures markets. I don't know enough about this to choose between WEAT and CORN, but they would seem to move pretty well in lockstep. More of a tango than a contago?

[redprince] 29/8/2009 19:01

New to commodities etc`s but interested as we must be nearing the trough of the cycle surely?What is the contango like on this one?

[bobdouthwaite] 29/8/2009 17:39

and price underpinned by increasing use for bioethanol, replacing more expensive sugar.

[shavian] 29/8/2009 09:01

Looks like bottoming out? Winter coming on.. El Nino... Gotta turn round soon.

[spob] 28/2/2008 21:39

Rogue trader at MF Global

During the early hours of Wednesday morning, February 27, a registered representative in one of its U.S. branch offices, trading in the wheat futures market in his personal account, substantially exceeded his authorized trading limit. The registered representative concerned has been terminated effective immediately.
Just posted on the MF Global website. The broker, spun out of London-listed Man Group last year, says the unauthorised trades have resulted in losses of $141.5m. For a single morning, that's pretty grim. The loss represents about six per cent of MF's equity.
Wheat prices have indeed, had a volatile week. Rising 25 per cent to a record high on Monday, the latest figures showed a drop of 25 to 50 cents a bushel in early morning US trade.
According to some reports, a computer systems failure allowed the trades to be booked.

Update - FT.com names the trader as Evan Dooley, a broker based in the Memphis office. MF Global shares are down more than 18 per cent.

[harrykewell] 28/2/2008 19:12

Bluebelle you are spot on!

10% up then 10% down on CBOT wheat futures exchange will take most stops out. Personally, I prefer to trade manually and have control of my assets.

Generally, a stoploss allows you to be manipulated by market makers looking for stock.

I sold this morning at $6.59 as the volatility was too much to bear. It was exciting though and I may be tempted back in to this or some one ETC.

Good luck to all.

HK

[dasv] 28/2/2008 15:45

bluebelle - you have a point. Stops would have to be set well below the volatility day=trading range. E.g. 15% below current price...

[bluebelle] 28/2/2008 11:57

Trailing stops on this are a recipe (no pun intended !) for disaster IMHO. The price fluctuates so much you'll get taken out regularly.

[dasv] 28/2/2008 09:30

WEAT is going up that's what's going on. Obviously it won't go up for ever. Trailing stops in order IMHO.

[harrykewell] 27/2/2008 17:19

Have you seen the CBOT turnaround was down 135 early on now up 134.

What is going on??????

[dasv] 27/2/2008 17:09

did you guys notice the price monitoring extension put on this security by the LSE today?

[dasv] 27/2/2008 16:48

don't be put off by high prices:

[hosede] 27/2/2008 15:25

On the other hand at the Elliot wave website, Vadim Pokhlebkin says that Wheat rising thru the roof of its trend channel is typical third wave (up) behaviour and very bullish. Take your pick :-)

[harrykewell] 27/2/2008 10:04

Can anyone explain the fall this morning, after new highs on CBOT.

The price movement of this asset is beyond me.

HK

[spob] 26/2/2008 13:13

From FT Alphaville

26 Feb 08

PM: Ok - i see from the paper this morning that you are determined to take a negative view of UK plc whenever possible
NH: what me??
PM: Poor Premier Foods
NH: come on every paper had a negative story on this creation
PM: two wrongs dont make a right
NH: what about 8?
NH: anyway, this creation of the corporate lab is getting hammered again
PM: Genetically modified finance
PM: What's the damage this morning then?
NH: well, traded as a low as 81.5p
NH: currently down 11.5p at 85.5p
NH: that's a drop of nearly 12% and a record low for the shares
PM: have the authorities - the FSA - been drafted in yet to check whether this is all down to short sellers?
NH: doubt it
NH: as I said earlier, just about every national newspaper had a negative article on the company this morning
NH: and people in the market are asking why one of its shareholders would dump 15m shares ahead of results if it did not think the dividend was going to be cut
PM: annual results due on Tuesday
NH: actually brokers are telling me that today's drop not only reflects fears about the results and Premier's weak balance sheet but also the price of wheat
NH: Premier makes Hovis right
PM: yep
NH: and the price of wheat rose 25% in the US overnight
PM: And up a bit more this morning
PM: We must assume tho that Premier will have hedged its wheat position
PM: Of course - used the futures - beign a smart GM finance company
NH: if not, this could look nasty
NH: actually Panmure Gordon, which follows the food sector very closely, have published a pretty bearish note on Premier this morning
PM: what does it say?
NH: well, they have followed the lead of Charlie Mills at Credit Suisse
NH: and cut their target price to 100p
NH: which looks to be a tad high
NH: for a stock that has fallen 20% in two days
NH: anyway, Panmure reckons the divi gets cut
NH: but they also concerned that Premier will not have had enough cash to hedge rising raw material prices in the futures market
PM: oh dear
NH: yep
NH: and as we pointed out here yesterday
NH: premier's need for cash is such that it has already been forced into debt factoring
PM: can we have a look at this Panmure note??
NH: here you go
NH: Cutting forecast ahead of results – downgrade to Hold
Our confidence in Premier's recovery story was knocked when we learnt that
the Bradford Bakery did not fully close as announced last Autumn. Despite
assurances that factory closures had 'progressed smoothly', some lines did reopen.

NH: While the bulk of the costs is likely to have been removed, we share the
markets concerns about transparency. We also doubt the effectiveness of
Premier's cost recovery in cakes. With rising input costs likely to exert further
pressure on the balance sheet we are cutting our forecasts for next year, and
our recommendation from Buy to Hold with a new 100p price target.

NH: Full-year results due 4th March: Premier will attempt to rule a line under what has been a pretty disastrous year. We forecast EPS falling by 14% to 15.5p, and now forecast that the dividend will be cut by one-third to 8p, a move that would save £34m cash and rebase the dividend to 1.9x cover.

While we don't think the balance sheet is in such a state that
Premier needs to make such a move, they might as well just cut it now rather than face another year of speculation about cutting the dividend.
NH: A desperate need for more clarity: We no longer feel confident that we know what is
going on within Premier. While Premier maintains that it has achieved price rises in cakes, Mr Kipling's permanent multi-buy offer of 2 packs for £2 is still in place. In bread, Hovis's market share has become more volatile, a factor behind the decision to reopen some of the lines at Bradford, but we worry that volumes have weakened further since Christmas.

NH: We also hope that Premier's stretched balance sheet has not constrained it
from buying forward its wheat requirement given rampant wheat futures prices (March futures have touched $20/bushel in recent days, quadruple the price last summer).

Forecasts cut. We are cutting our 2008E EPS by 11% from 20.1p to 17.8p and our
2009E forecast by 15% from 24.4p to 20.6p on the assumption of lower margins in Cakes (falling from 10% to 8%) and only a marginal recovery in profitability in bread bakeries.
NH: Recommendation: We forecast net debt/EBITDA of 4.2x for 2008E, against an
estimated banking covenant of 5.0x, so on the face of it Premier still has room to
manoeuvre. This has been a key premise of our Buy recommendation, but given the lack of visibility and stretched balance sheet, we cut our recommendation to Hold with a 100p (275p) price target, equal to 6.5x EV/EBITDA for 2008E.

PM: thansk for that
PM: and while we are on the subject of wheat
PM: I just want to post our piece on wheat from this morning's paper
PM: was written by our commodities corr Javier Blas



PM: Prices of top-quality wheat jumped 25 per cent to a record high on Monday in their largest one-day increase as Kazakhstan, one of the largest grain exporters, said it would impose export tariffs to curb sales.
The move, which follows similar export restrictions in Russia and Argentina, is likely to put further pressure on already tight global wheat supplies, analysts said.
Akhmetzhan Yesimov, Kazakhstan's minister of agriculture, said the government wanted to limit exports as it battled against rising domestic inflation of nearly 20 per cent.
Mr Yesimov said: "Whatever happens, we will soon limit exports."
Food prices have been rising steadily in the past few months and the effects are being felt globally. Our multimedia feature explores the factors that contribute to food price inflation
Kazakh grain, prized for its high protein and gluten content, is similar to some of the scarce top-quality North American crops that jumped in price on Monday.
Spring wheat at the Minneapolis Grain Exchange surged an unprecedented $4.75 to a record high of $24 a bushel as consumers scrambled to secure supplies and speculators poured fresh money into the agriculture market.
The price of spring wheat, used to bake bread, has more than doubled since January and has risen fourfold in the last year, contributing to a rise in global food inflation.
Gavin Maguire, of Iowa Grain in Chicago, said consumers such as mills and bakers, who needed wheat, were "panicking".
He said: "Historical references are useless. We are breaking all the rules."
Iraq and Turkey said they were planning substantial wheat purchases to replenish inventories and analysts said China could be forced to follow because of drought damage to its next crop.
Global suppliesare scarce after extreme weather damaged the crops in Australia, Canada and the European Union. As a result, the US is experiencing record demand and its inventories are set to drop to the lowest for 60 years.




NH: interesting piece
NH: but some brokers - ones that have buy recommendation on Premier - say the negativity is overdone
NH: they say the 25% rise was in one contract, which was coming up to expiry in the US
NH: and therefore does not reflect the picture in the UK
NH: futhermore, they contend that Premier has significant forward cover in place
PM: Yeah right
PM: "The market price is wrong"
NH: and that in the past year they have been successful in pushing through prices rises
NH: and anyone who has paid 130p for a loaf of bread can testify to that
PM: Sam has just owned up to paying 250p in Borough markets
NH: What, for a loaf of bread


27 Feb 08