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Grains & Agricultural Futures

  • #1
  • First Post: Aug 2, 2006 11:31am Aug 2, 2006 11:31am
Hey guys, anybody thinking about going long corn futures??? By the way, the CBOT just allowed the agricultural contracts to be traded electronically, I think liquidity will be going through the roof along with prices of most agriculture products, specifically corn & Soybeans....


Thanks,

Nader
  • #2
  • Aug 13, 2006 6:25pm Aug 13, 2006 6:25pm
I myself have recently considered investing in corn for the long term (that's right, I said investing--I'm not to interested in short term trading). The problem is, I have no idea how to even buy corn futures. I have absolutely zero futures trading experience. Can one purchase corn futures similar to how one trades currencies (i.e. find a broker, use a trading platform, etc.)? If so, anybody have any brokerage suggestions?

I just began investing this past year. So far I have all my money in a few different broad market ETFs. Corn intrigues me because of it's potential as an alternative fuel source (Ethonol 85). Plus, I just think natural resources are a good place to invest in at the moment. Developing nations like China and India are starting to compete with the USA for commodities. And I don't see the prices of those commodities going anywhere but up.
  • #3
  • Aug 13, 2006 11:32pm Aug 13, 2006 11:32pm
Quoting mattlorig
I myself have recently considered investing in corn for the long term (that's right, I said investing--I'm not to interested in short term trading). The problem is, I have no idea how to even buy corn futures. I have absolutely zero futures trading experience. Can one purchase corn futures similar to how one trades currencies (i.e. find a broker, use a trading platform, etc.)? If so, anybody have any brokerage suggestions?

I just began investing this past year. So far I have all my money in a few different broad market ETFs. Corn intrigues me because of it's potential as an alternative fuel source (Ethonol 85). Plus, I just think natural resources are a good place to invest in at the moment. Developing nations like China and India are starting to compete with the USA for commodities. And I don't see the prices of those commodities going anywhere but up.
http://www.manfutures.com/

Is a megacap futures brokerage firm I used via tradestation. You can trade pretty much any futures contract in existance with them.

"Investing" in futures is sort of a fools game though. All futures contracts have standardised settlement dates and to hold a long term position will require rolling over. When you roll, you have to pay additional commisions AND take the interest rate hit. Also, given the size of the contracts, you need some serious capital to weather the volatility over the long haul.
  • #4
  • Aug 13, 2006 11:46pm Aug 13, 2006 11:46pm
Corn like many other agri-products are heavily subsidized there's definitely some upside to the contract but a lot of downside...if it spikes up, it'll definitely come back down to earth...possible strategy implied
Ethanol looks overbought (call it hype)

Buy some usd T-bills and wait...

later...
  • #5
  • Aug 14, 2006 8:56am Aug 14, 2006 8:56am
Why should I buy US T-bills? I realize rates a fairly high right now (about 5%). But, my investments are for the long-term. I'm relatively young (24). And over a period of years stocks will likely do better than bonds, even if they don't look so hot at the moment. I do, however, appreciate your advice on corn futures. The main reason I have yet to invest in anything related to futures, is because I know so little about it.
  • #6
  • Aug 14, 2006 9:38am Aug 14, 2006 9:38am
just a humble opinion nothing more...

Being young is beside the point... I'm nothng more than a kid, well thats what everyone tells me...the question is whether you want to trade or invest
If you want to trade...trade...
if you want to invest...invest...
Learn your instruments and work with them...
take care...
  • #7
  • Aug 14, 2006 9:43am Aug 14, 2006 9:43am
Quoting Darkstar
http://www.manfutures.com/

Is a megacap futures brokerage firm I used via tradestation. You can trade pretty much any futures contract in existance with them.

"Investing" in futures is sort of a fools game though. All futures contracts have standardised settlement dates and to hold a long term position will require rolling over. When you roll, you have to pay additional commisions AND take the interest rate hit. Also, given the size of the contracts, you need some serious capital to weather the volatility over the long haul.
Would investing companies who would benifit from increased corn prices (i.e. producers) be the way to take advantage of a long term projection in the increase corn prices?

SilverB
In trading you are only as smart as your dumbest mistake. - Ralph Vince
  • #8
  • Aug 14, 2006 10:52am Aug 14, 2006 10:52am
Quoting mattlorig
Why should I buy US T-bills? I realize rates a fairly high right now (about 5%). But, my investments are for the long-term. I'm relatively young (24). And over a period of years stocks will likely do better than bonds, even if they don't look so hot at the moment. I do, however, appreciate your advice on corn futures. The main reason I have yet to invest in anything related to futures, is because I know so little about it.
south africa t-bills are about 7.5% right now you might look into them.
  • #9
  • Aug 14, 2006 12:05pm Aug 14, 2006 12:05pm
why corn? ... ethanol?
  • #10
  • Aug 14, 2006 12:32pm Aug 14, 2006 12:32pm
Ethanol will not pay even for its own distillation, energy-wise, much less for production costs/ transportation ets. There are indeed some dough to make while government waste my taxes on both corn-growing and ethanol producing, but even this will be purposeless when natural gas prices will go up ( and up they will go ). Ethanol from corn is good for drinking only.
  • #11
  • Aug 14, 2006 12:36pm Aug 14, 2006 12:36pm
Quoting mattlorig
Why should I buy US T-bills? I realize rates a fairly high right now (about 5%). But, my investments are for the long-term.
Maybe you should clarify what you consider "long term". Does that mean your going to buy something and sit on it for the next 40 years regardless what happens? The stock "market" may outperform bonds in that period, but in 40 years, less then 1/10th of the companies now listed will still be in existance. In my personal opinion the buy and hold mentality is the surest recipe for disaster in all of finance.

Thats not to say that Bonds are the end all be all of investment either. What makes them compelling at the moment is the idea that the fed is at the peak of the interest rate cycle. The coupon may only be 5%, but there is a significant opportunity for capital appreciation as rates start falling. The "trade" will take 1-2 years to mature, but when it does, other opportunities (like the stock and housing markets) will be at more attractive levels.

The corn play may be a good one, but it isn't a 40 year opportunity either. The mathmatics of ethanol make it an impossible alternative to petroleum products and at some point humanty will come to that conclusion. Fusion power plants and hydrogen based engins are proven technological opportunities that have significantly better scalability. It would be silly to anticipate americans clinging to their $4/gallon e-85 guzzlers when they can upgrade to a vehicle that can be filled with $2 worth of water...
  • #12
  • Aug 14, 2006 5:34pm Aug 14, 2006 5:34pm
Quoting Darkstar
It would be silly to anticipate americans clinging to their $4/gallon e-85 guzzlers when they can upgrade to a vehicle that can be filled with $2 worth of water...
...for just a little bit over a million dollars.. Sorry to dissappoint you guys, but these fuel cells are no more solution than ethanol. not for 7 bln people, at least. Besides, you need tons of eletricity to get that hydrogen.And where the platinum will come from? The supply cant cover current demand. Sorry guys, once you cant afford to buy oil, its over.
  • #13
  • Aug 14, 2006 7:12pm Aug 14, 2006 7:12pm
Quoting Vlad
...for just a little bit over a million dollars.. Sorry to dissappoint you guys, but these fuel cells are no more solution than ethanol. not for 7 bln people, at least. Besides, you need tons of eletricity to get that hydrogen.And where the platinum will come from? The supply cant cover current demand. Sorry guys, once you cant afford to buy oil, its over.
In 1945 the ENIAC computer cost $500,000 to produce. The inflation adjusted cost in 1990 dollars was ~$3.5 million. By 1990, computers many orders of magnatude more powerful were available on retail shelves for $1-1.5K. Now I'm not advocating that we will have hydrogen powered cars costing $1000 by 2020, but to assume that significant costs cannot be removed via massproduction is a bit silly.

With regard to the plantnum, I don't see this as an issue. PMGs are interchangable and every car on earth is rolling around with several ounces of palladium in it's catalytic converter. Considering the fuel cells only require a "dusting" of the metals to facilitate the reaction, we would probably have a sharp INCREASE in the available supply...

The technology has a long way to go, but it would be foolish to dismiss it for the reasons you sighted.
  • #14
  • Aug 14, 2006 10:46pm Aug 14, 2006 10:46pm
Quoting Darkstar
In 1945 the ENIAC computer cost $500,000 to produce. The inflation adjusted cost in 1990 dollars was ~$3.5 million. By 1990, computers many orders of magnatude more powerful were available on retail shelves for $1-1.5K. Now I'm not advocating that we will have hydrogen powered cars costing $1000 by 2020, but to assume that significant costs cannot be removed via massproduction is a bit silly.
Today, it takes 700 square feet of photovoltaics (god knows what they must cost) operating for one week to produce enough hydrogen to drive a fuel cell car costing about $1 million dollars, 160 miles.

Decades away. $100 oil? Months away. $200 oil? a few years away.


Quoting Darkstar
PMGs are interchangable and every car on earth is rolling around with several ounces of palladium in it's catalytic converter.
couple grams may be.

Quoting Darkstar
Considering the fuel cells only require a "dusting" of the metals to facilitate the reaction, we would probably have a sharp INCREASE in the available supply...
even if it so, i fail to find logic here

Quoting Darkstar
The technology has a long way to go, but it would be foolish to dismiss it for the reasons you sighted.
technology does have a long way to go, thats for sure. Oil&gas does'nt.
  • #15
  • Aug 15, 2006 9:36am Aug 15, 2006 9:36am
Quoting Vlad
Today, it takes 700 square feet of photovoltaics (god knows what they must cost) operating for one week to produce enough hydrogen to drive a fuel cell car costing about $1 million dollars, 160 miles.

Decades away. $100 oil? Months away. $200 oil? a few years away.



couple grams may be.


even if it so, i fail to find logic here

technology does have a long way to go, thats for sure. Oil&gas does'nt.
So I guess we should all just kill ourselves now...
  • #16
  • Aug 15, 2006 3:10pm Aug 15, 2006 3:10pm
Quoting Darkstar
So I guess we should all just kill ourselves now...
Well it is a bit excessive I think. There are will be plenty oportunities to die in the future , there is no need to insult God now. Just be prepared for a steady decline in quality of life, prepare to work more for less money. You do already ( if you work for a living ) , you just don't notice the difference yet.
I personally consider it as a chance for humanity to develop healthy , and sustainable way of living. For those who will survive I mean.
  • #17
  • Oct 10, 2006 1:48pm Oct 10, 2006 1:48pm
Anybody noticed the blowoff in grains lately....Wheat, Corn & Soybeans all blew off...Wheat closed limit up yesterday for the first time in 10 years & corn followed...Soybeans were the laggard but also got some good gains...Although the grains futures didn't hold too much gains today, I still see more upside potential....


Thanks,

Nader
  • #18
  • Nov 15, 2006 2:25am Nov 15, 2006 2:25am
anybody trading Soybean Oil?
Why the bounce & can it continue going north?
its just money
  • #19
  • Nov 15, 2006 3:04pm Nov 15, 2006 3:04pm
If you have been following grains like I did during the past 2 months, you would have known that it is not soybean oil only...It has been wheat, corn, soybeans & soybean oil...I rode the up trend of the soybeans & managed to grab some good money out of the market...

Why the rise, the rise was actually sparked by wheat because Australias' crop came out to be 50% lower than the previous year & of course way below all expectations...Wheat shot up, experiencing 3 days of limit ups (Which haven't happened for many years), then corn followed & finally soybeans & soybean oil shot up in anticipation that farmers are going to quit growing soybeans during the next season & grow higher priced grains (Wheat & corn)...So once the market proved the move to be consistent & not short term spiked, soybeans shot to the moon & soybean oil followed of course...

I believe that grains can continue north, but not before they take a breather from the huge upmove they registered during the last 2 months...


Thanks,

Nader
  • #20
  • Nov 16, 2006 11:08am Nov 16, 2006 11:08am
Thanks,

am watching all agricultural futures,...true, all getting north,....and true again...all in area profit taking, so short is the answer..... I am just asking myself why my broker never does say short some futures. 70-80 % of predictions are only long ones. And as from today, i have earned more if shorted.

thank You
its just money
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