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listen, i KNOW this is a PM board, but i just HAD to share this with you all....and its just soemthing for you all to watch.

i assume we all are into stuff that has intrinsic value, and/or markets that are sill coherent, and to me, Wheat is one of those left...one of the few.

We trade three classes of Wheat, soft red winter, thats Chicago wheat...lowest protein...then we trade KC Wheat, hard red winter, higher protein...(KC got bought by the CME. so them boys are moving) and then Minneapolis Wheat, thats hard red SPRING wheat, and is the highest protein...protein in wheat always commands a premium.

there's a way to trade grains, in this case wheat...its spread trading. its involves the price relationship between either different months of the same grain.....lets say corn.......or the three classes of wheat, and there is a nice situation setting up in the Dec 13 Minn wheat over the Dec 13 KC wheat.......the winter wheat is in the ground now, thats KC, the spring wheat will be planted...in the spring.

Minn spring wheat, higher protein usually trades over KC and Chicago, but the premium varies widely. i been watching this Minn DEC13 wheat trade 25 cents over KC DEC13 wheat....today Minn Dec is trading 864 and a half, and KC DEC13 is trading 843 and three quarters....thats roughly Minn trading 21 cents OVER KC....still with me?

i've seen Minneapolis trade a dollar, 1.00 over KC...

here's what i would do, (and i'm not going to, because of the MF Global-Corzine boll shot) i would buy Minn Dec13 21 cents over SELLING KC Dec13 ....thats a spread trade....what i would be looking for is Minn DEC13 to trade 75cents to a dollar over KC.

some people say spread trading is boring, like watching paint dry...good! i like boring. This is not a trade reccomendation, not at all, but since you guys are so generous in sharing what you know about PM's, i want to share what i know, thats why i put it here, and i ask forgiveness if i violated protocol....just watch how it trades...its interesting.

my whole reasoning is this...remember last year?....we started the growing seaason good, fairly good precip......so they were able to get good yields on the winter wheat, which gets harvested in the late June, July time frame....JUST as spring planted grain was starting to burn up.

i'm not saying we drought up this year..GOD FORBID, but of all the grains...GLOBALLY....wheat has the dicey-ist supply/demand situation. ANY disruption in a what exporter?....we are off to the races....so just write it down and watch...its kind of cool.

the free commodity quotes i use are http://futures.tradingcharts.com/marketquotes/

i check them everyday...last year i was watching the July13 Corn against the DEC13 corn......in late June, July13 was trading 20 cents over Dec13...i wanted SO BAD to buy July 20 cents over Dec....i could tell the way the weather was setting up, it was going to be bad. But i wont put a clad DIME into a brokerage acct...anyway, the drought hit and that July13 Corn went $1.40 over the Dec13......i probably would have been selling at 1.20 over.....but you know how much money that is?.......5k a CAR...contract...and i usually put on ten, which in the whole scheme of things, is small time, but for me a lot. Guys i know would have 500 cars on.....but if you dont trust something, then is it worth the worry?

so thanks for letting me share to those who have shared with me, neil

Thanks for the information. I've been starting to get a little more interested in the grain markets lately. To me, grains are a natural extension of pms (or the other way around) in that they have an inherent value and will always be needed and traded.

Lots of us on here trade wheats

Hawkeye wrote:Thanks for the information. I've been starting to get a little more interested in the grain markets lately. To me, grains are a natural extension of pms (or the other way around) in that they have an inherent value and will always be needed and traded.

Hawk.......just what you said, made me feel that it would OKAY to share my thoughts, and my predeliction for spread trading wheat.....as opposed to "naked" long or short the wheat, corn, etc...Grain trading is millenia old...grain is currency. If we talk prepping, 5 gallon buckets of say hard red spring wheat berries, sealed correctly...are good for 25 years...combine that with a GOOD stainless steel hand grain miller, which i bought....i think it cost $400....thats good money spent, imo. you also can rig the mill to use electricity.

NHsorter wrote:Lots of us on here trade wheats

that IS funny....live free or die!! oooorah.

Hey Neil -
I like this topic - gave me a new insight about trading other items besides silver! Now, not to sound like a complete moron but how would one go trading items such as this? Would I sell my wheat online? How would I acquire my wheat and then re-sell it back into the market.

I'd like to learn more!

Thanks -

Nick

njo.electric wrote:Hey Neil -
I like this topic - gave me a new insight about trading other items besides silver! Now, not to sound like a complete moron but how would one go trading items such as this? Would I sell my wheat online? How would I acquire my wheat and then re-sell it back into the market.

I'd like to learn more!

Thanks -

Nick

i would never think of anyone as a "moron"....so no worries on that account. i count anything i can share, knowledge or bread or love, as an opportunity to bless another. no higher calling.

that said, you see that link to the price quotes?....thats a wonderful free website to watch the trade...pick three markets, maybe five....lets say, the three classes of wheat. Chicago, KC and Minneapolis...and include corn, and for fun, coffee.

that website will also show daily, weekly and monthly bar charts...if you have a printer, you can print up charts. to trade, one MUST first watch how a market trades, before even THINKING about committing any funds. This period of just watching should, imo, last for a year...MINIMUM.

Now traditionally, one would open up an account at a "house"...a futures trading account, in the "old days"...say for instance the 90's (lol..i started in 1981) i opened up an account for 5,000 in 93, when i was working something else, i was also spread trading corn, and made that grow into six figures, gave half that back, etc etc...there WAS a day when you could open a trading account for 5 to 10k, and be good. Nowadays, imo?.......100k is the minimum...and hear me clearly...that 100k HAS TO BE MONEY, that you can put in the corner of room, put lighter fluid on it and set it aflame,and it wouldnt be the end of the world.

You have to be prepared to lose it ALL, other wise, please, i beg you, do not even think of trading futures. The only way one can trade futures, is without ANY FEAR, and married to the knowledge of how both the market works...and more importantly, how YOU work.

so first. just watch how the market trades...clock it...and the best book to read, hands down, is "Reminensces of a Stock Operator", by ....oh gee....just put the title into amazon....it was written by the famous stock trader, Jesse Livermore, who btw blew his brains out in NY hotel bathroom...he wrote it under a pseudonym...Edwin Lefebrve...its a GREAT book..invaluable.

also, if you call futures brokers, dont let them talk you into trading options. They'll fill you full of "how we can limit your risk", by BUYING options....that your risk is "defined".......MOST buyers of options lose money......many an offspring of commission brokers have their private school tuitions paid for on the backs of countless men, who heed this swan song...dont be one of them.

These days, since Jon Corzine got away with imploding MF Global, which used to be a pretty good house...this guy blew up the firm to the tune of 1.6 bln dollars, and is still walking around a free man, while a lot of cattle lot hedgers, grain elevator operators, sat for a long while with their monies tied up...its a bad story, and i personally dont trust the integrity of a lot of institutions i dont even want to name on a public discussion forum.

for now, just watch the markets, read that book, and maybe "paper trade" to see if you got a feel for it...futures trading is not for the faint of heart, or undercapitalized.....and dont let anybody tell you otherwise. Be blessed, neil

Hi Neil. Most of my trades are corn,beans,hogs and gold. I saw your post on wheat and I thought what the heck. I put it on at 22 over.

The book Neil suggests can be had on Amazon for $4.00, including shipping, like new condition isbn # 0471059706. There are also some 15 different prints avaliable as wish on paperbackswap.com with only one wish on the 1994 paperback. None on the other 14.

sambo wrote:Hi Neil. Most of my trades are corn,beans,hogs and gold. I saw your post on wheat and I thought what the heck. I put it on at 22 over.

good deal....y'know i think by 3rd quarter MWZ13 will trade 75 cents over KWZ13....(guys M stand for Minneapolis.... K for KC, W for wheat....Z is the symbol for Dec and 13 is 2013)....and if we drought up in July/August a dollar plus over....but as you know, its like watching paint dry...which is good.....hey sam, what are they asking for M/KC margins these days?.....just curious.

Neil. The wheat spread margin is around $1,000.00.

sambo wrote:Neil. The wheat spread margin is around $1,000.00.

thats not bad...coz the worst that can happen, is Minn trades even money with KC, and that is a RARE event, and at even money i like it MORE!1 so say you put 2 on here....its goes down to 10 cents over...you're down a grand...put 2 more on....thats 4 k in margin, plus the thousand you're down...and your objective is 75 cents over....whats your stop loss?.......say in Oct/Nov, worst case scenario, its lingers at 10 to 20 over.....just stays stationary.....in Nov, you bail, and basically scratch or lose a couple thousand, against making 60 cents a car....which is 3k a car, times 4...or 10...whatever, but it works out to a 6 to 1 reward to risk ratio. Thats the kind of trade one likes, anything above a 3 to 1 risk to reward, imo.

i just dont trust the brokerage house anymore, the exchanges...i dont trust the power structure not to pull some sort of "emergency action", if we get another damn "Lehman moment"....but its a good trade, and i got a bud, one phone call away, open an account....but another thing is, i dont have that ability to take the pressure anymore, which is sad, coz it seems like a winner.

thats why i like stacking...you dont have to spend everyday biting your fingernails. thanks for the info.

update.....11 Feb Monday, Minn Dec13 wheat was trading 21-22 cents over the KC Dec13 wheat, and two trading days later, the Minn Dec wheat is trading 30 and a half cents over the KC Dec wheat....wow...for a spread trade to go to the good 8 to 9 cents in two days is a pretty big move......thats 400-450 a car.....and that kind of spread, i would had a position of anywhere from 5 to 10 cars on....not the initial trade....at 21, i would of put on 4 cars, and then 2 more and 2 more.

a mistake a lot of guys make is, when they pryamid trade is to inverse pryamid trade, such as they put on 2 cars at the bottom, then when it goes good, they'll put on 4 more HIGHER, and so on.....like if you decide your position is going to be 8 to 10 cars....("cars" is another way in futures to say "contracts"...it comes from railroad cars, like a "car" of frozen pork, or grain, or bean oil, etc)...your first trade should be the biggest, and THEN go smaller...like 4......2......and 2.

hey, Minneapolis DEC13 wheat 30 and half cents over KC dec13 wheat is STILL a good trade...its just if you did it at 21-22 over, you;d have a nice lead to put more on, to shoot for the initial objective of 75 cents over....looking then for a 1.00 over.

wheat trading can be fun...or it can be nightmare, like in early 94, i had 300 "naked" longs of Minn wheat on, and Greenspan decided it was time to tighten money, and upped Fed Funds rate, and that day every single physical commodity got slammed...some limit down, including wheat...it was the first time i wasnt spread, i was just long and wrong...i thought i was a big swinging d*ck, coz i was golden, making big money, and got cocky.....there ya go. Anytime you get cocky in the market, the handwriting is on the wall, you are RIPE for the slaughter, and i was butchered. Paid some tuition money that day to Commodity College.

thats why they call them "tranquilizers".....lol.