23 replies to this topic

[SilentOne]

I have been studying the soft commodity sector for a while now. I have never played the sector primarily because I don't trade commodity futures or options, so I am limited to the more general investment products issued in the financial market. One fund has caught my eye is Powershares DBA. I think Mike has been trying to play this long on at least one occasion this spring.

The DBA fund profile can be seen here:

Powershares DB Agricultural Fund

The fund is currently comprised of corn, soyabean, wheat and sugar.

I entered long this week at 25.1, 25.3 and at today's open.



More charts to follow as I can't upload right now.

cheers,

john

Edited by SilentOne, 25 May 2007 - 08:46 AM.

[PorkLoin]

Nice, John. Thank you. Doug

[SilentOne]

Hi doug,

I haven't decided what timeframe I will play this. But into this summer, the grains look good for a rally and sugar probably bottomed this week. Corn could be the one drag on this mix of soft commodities.

cheers,

john

Edited by SilentOne, 25 May 2007 - 09:41 AM.

[PorkLoin]

Ah, the softs. I traded commodities for 20 years, and had some real ups and downs - a few good ups and more bad downs. Coffee just plain flummoxed me. I totally missed out on two gigundus moves higher, and developed considerable expertise at placing stops at the far boundaries of where floor traders could run the market during bear raids or bull raids. My last year of trading I had 8 of 9 losing trades in coffee. Cocoa, on the other hand, was a joy. Maybe it was the smaller contract or maybe it was the "smooth" feeling I got from the whole numbers in which cocoa traded. 1528, 1400, 1630, etc., oh how beautiful were those figures. Nasty old T-Bonds with their 3/32 and so fourth... yuck. Orange Juice = thin market, bad fills, and a lot of whining from me. It didn't go on too long, though, I just quit messing with OJ. Sugar.... As I recall there was a titanic move higher into 1974, and another zooming move up in 1981. I began trading in 1982 and I was always on the lookout for the next big bull. By 1985 sugar traded clear down to 2.74, I believe, and I gave up on it. Of course it promptly started moving up and was over 9.00 in 1986. Lumber was a good one; don't even really know why. Should have stuck to drinking cups of cocoa on a wooden deck, and left the rest of the softs to rot in their bins and tanks. In the end I think the leverage was just too much for me, and I was either too patient or not patient enough. 20 years and I probably learned what a better trader would have done in 3. John, I do like commodities in general now, as far as investing. Biggest "fear" I have is deflation, but we've a ways to go before that's the real deal, IMO, and I don't think the US gov't will accept it, if the gov't really has anything to say about it. Everybody's planting corn, so soybeans should be interesting. Nice move underway in DBA, over 26 last I saw. Best, Doug

[chris]

I trade the softs with great patience since they can be easily manipulated. I waited forever for OJ to match its all-time high, and then took a short position off the daily chart. I also currently have a long position in December Coffee, buying on the weekly trendline touch. I usually use mental stops, so the floor traders don't gap a trade up or down just to run my stop. I haven't posted anything on the softs or grains on any of the Traders-Talk forums because I didn't think anyone would be interested.

[SilentOne]

Wheat broke out to a new high today.



cheers,

john

[Jnavin]

So, no surprise that DBA is working out so well.

[vitaminm]

DBA R1-27.41

[SilentOne]

Steve Saville wrote the following today. Permission was grant to post this here.

The Speculative Investor

"Commodities

Agricultural Commodities

We continue to be bullish on agricultural commodities, primarily the grains.
We therefore continue to believe that it makes sense to scale into DBA -- an
ETF that invests in corn, soybeans, wheat and sugar futures.

Be aware that this bullish outlook is of the 'big picture' variety and that
we have no expectations regarding what will happen to grain prices over the
next few months, other than we certainly don't expect them to collapse.
Short-term price moves will continue to be determined to a large extent by
the effects of weather on crop conditions, and we have neither the time nor
the inclination to become experts on such things.

Our view, in a nutshell, is that a secular bull market has commenced in the
agricultural sector due to the coming-together of three major long-term
price drivers. These price drivers are:

1. Inflation

Rampant money-supply growth throughout the world has put upward pressure on
the prices of all commodities, but the agricultural commodities have
generally been affected to a much lesser degree than the base metals and
'energies'. This has left the real (inflation-adjusted) prices of most
agricultural commodities at extremely low levels relative to the real prices
of many other commodities, thus setting the stage for big catch-up moves.

2. Using food for fuel

Rational concerns about energy security and depleting supplies of
conventional fuel, along with irrational (we think) concerns about "global
warming", are causing rapid growth in the demand for renewable fuels made
from agricultural commodities (corn-based ethanol, for instance).

3. Increased Chinese demand

China's demand for food commodities (grains, pork, beef) is growing much
faster than its ability to produce these commodities. As a result, China
will be importing a lot more food in the future than it has in the past.

The ETF mentioned above (DBA) is not the sort of investment that's likely to
provide a quick double, at least not at this stage of the long-term bull
market. By the same token, it has minimal downside risk compared with other
investments because even if a global recession were to begin later this year
the demand for food would probably continue to rise; as would the demand for
renewable fuels such as ethanol. That is, we think DBA is close to being
'crash proof'."

[hiker]

thank you guys for this thread, and John for Steve's article. John, you have a read
on the FCX weekly chart? pullback due before another leg up?

or leg up simply about complete?

asking this question with the 2013 time extension in mind. any thoughts about FCX are welcome.

in thanks, I will post this photo of an old barn at dusk...

the setting is cool, though sorry to say the barn is hard to see -

Edited by hiker, 15 June 2007 - 01:27 AM.