Weekly chart of Green Mountain Coffee Roasters
While we are on the subject of Coffee, lets take a look at how the price of Green Mountain is faring. On the week ending on 20 July 2012 it closed at $17.57. It made a yearly low at $17.11 on Monday 23 July.
At pixel time it is at $42.
Back in July “Takeover Analyst” wrote “Buy Green Mountain and Forget About Starbucks”
Starbucks closed at $51.96 on July 20 and is now at $54.23
Back in June 27, 2012 we observed the hammer in the Coffee C futures. The price was at $1.65 per pound. On July 11 it reached a monthly high at $1.92. (1 cent move = $375, as one contract is for 250 bags or 37.500 pounds net weight. Margin is $4455)
Since then prices have been declining. Coffee made a yearly intraday low today at $1.4180. Coffee, at pixel time, is at 141.90 cents
Coffee Options Specifications here
Minimum Price Movement is 1/100 cent/lb, equivalent to $3.75 per contract.
Strike increment is $0.025 cents per pound.
For example, the March call with a strike $1.900 costs 23 times $3.75 ($86.25)
The option with the most volume on Dec 19 was the March call with a strike of $1.550 which settled at 273 (at a cost of 273 x $3.75, or $1023). Coffee’s last price for Thursday Dec 20 was at $1.4285
Economic growth [in Iceland] is expected to be 3.1 per cent this year and 2.2 per cent in 2013. But surely after stitching up its bank creditors – the Icelandic banking default cost $85bn, a massive amount for a country with a population of 320,000 people – the country remains persona non grata with the international financial markets. Having been so badly bitten once, the markets must be twice or even thrice shy of Iceland.
Not so. The Icelandic treasury successfully flogged $1bn of 10-year bonds to investors in May. These bonds were initially priced to yield a spread of 407 basis points (4.07 per cent) over comparable US treasuries, a margin which has since narrowed to 296 basis points.
In the financial markets, as elsewhere in life, eaten bread is soon forgotten. Would-be investors in Icelandic bonds focus most of their attention, not on what happened in the past, but on what is likely to happen in the future.
What these investors see is that, by burning the bank bondholders rather than taking these debts on to the national balance sheet, the Icelandic sovereign is in a far stronger position to repay any future debts.
…
Now, as if to add insult to injury, the Icelandic banks are preparing a return to the markets. Unlike Ireland, Iceland immediately nationalised its bust banks in the autumn of 2008 but refused to assume responsibility for their liabilities. The cleaned-up Icelandic banks are now getting ready to issue foreign currency bonds, the proceeds of which will be used to help finance the thriving, export-driven Icelandic economy.
EURUSD future. Weekly barchart.
At pixel time was 1.3257
EURUSD is ending 2012 on a strong note. Mario Draghi (“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough” * ) was awarded Person of the Year for 2012 by the Financial Times.
* On the morning of Thursday, July 26 Draghi uttered the above statement. The EURUSD future made a yearly intraday low on Tuesday, July 24 at 1.2051, and a yearly low on a closing basis, at 1.2071 on the same day.
Economist Nouriel Roubini says,
Europeans need to see a light at the end of the tunnel in the form of income and job growth. If recessions deepen, the social and political backlash against austerity will become overwhelming: strikes, riots, violence, demonstrations, the rise of extremist political parties, and the collapse of weak governments. And, to stabilize debt/GDP ratios, the denominator must start rising; otherwise, debt levels will become unsustainable, despite all efforts to reduce deficits.
The tail risks of a Greek exit from the eurozone or a massive loss of market access in Italy and Spain have been reduced for 2013. But the fundamental crisis of the eurozone has not been resolved, and another year of muddling through could revive these risks in a more virulent form in 2014 and beyond. Unfortunately, the eurozone crisis is likely to remain with us for years to come, sustaining the likelihood of coercive debt restructurings and eurozone exits.
This view is also shared by the International Labor Office , in its latest Global Wage Report:
a single-minded focus on lowering unit labour costs would fail to take into consideration the generally negative impact of lower wages on private household consumption, and hence the uncertain effect on overall aggregate demand
Cotton March 2013 contract currently at 76.01 cents. Below is a chart with the closing price for the last 2 years (Dec 17, 2010 to Dec 17, 2012). The high was on Feb 17, 2011 at 107 cents and low on June 5, 2012 at 67 cents.
Chart via ICE
We are looking for a tightening of cotton’s term structure as such will tell us that cotton is in a bull run. Backwardation is ” a pricing anomaly that typically – but rarely – shows up in the commodities market. And if you can catch it, you can make quite a bit of money”
Yesterday (Dec 17, 2012) Cotton (March 2013) advanced $0.75/lb. May 2013 advanced only $0.62/lb. July advanced only $0.36/lb. Looks interesting!
Cotton Forward Curve, below. The chart displays 76 cents through 80 cents per pound. October 2013 cotton is at 78 cents and Oct 2014 above 80 cents. Cotton in contago, below.
Cotton No.2 Futures Specifications
Each .01 cent fluctuation = $5
Contract size is 50.000 pounds net weight
Initial margin $1925 (via Bloomberg)
Trading hours: 5:30 am to 9.30 pm (Athens time). Trading platform available from 3:30 am for order entry.
Dec. 17 (Bloomberg) —Gartman will buy one unit each of corn and cotton and sell two units of crude oil “with equal dollar sums on both sides of the trade,” according to an e-mailed report today.
Gavin Maguire (December 14)
Many grain traders are creatures of habit, turning to a select
array of time-tested trading strategies at certain times of the
year, such as the corn versus soybeans trade early in the U.S.
spring planting season, and old-crop versus new-crop corn and
soybean spreads in the summer as both those crops begin their
key growth phases.
Another crowd pleaser is the corn-versus-wheat trade that plays
out over the opening weeks of the calendar year, and traditionally
involves wheat values eroding relative to corn as winter
wheat emerges from dormancy while corn begins to stake its
claim for increased acreage in the spring. That strategy could
well prove effective again in 2013, but has additional risk embedded
this time around given the poor condition of the latest
U.S. wheat crop that could help prices resist their traditional
New Year wilt.
FRIENDS OF THE TREND
One of the most alluring elements of the corn-versus-wheat
spread - especially the March corn versus March CBOT wheat
variety - has been its track record of narrowing steadily over the
first two months of the year. A similar pattern unfolds in the May
contracts, which capture more of the winter wheat crop’s emergence
period and also run into any early spring planting problems
that can serve to support corn values.
Offering additional appeal this time around is the prevailing low
level of U.S. and World corn inventories, which is expected to
firmly underpin corn values over the opening weeks of 2013 as
traders turn an eye toward U.S. planting prospects for the upcoming
year.
For a graphic of the corn-wheat spread, seasonally, click here
SHORT WHEAT A RISKY BET
In order for the short wheat, long corn trade to be effective, the
short wheat leg requires that wheat values lose ground relative
to corn during the early New Year time slot.
But such a move may not materialize to the degree expected in
2013 given the prevailing concerns about the state of the U.S.
winter wheat crop, which has entered its winter dormancy phase
in the worst condition on record as parched soils across the
Central Plains deprived the crop of a chance to establish a
strong root system.
For a graphic of U.S. winter wheat crop ratings, click here
Changing global wheat balances also stand to impact the wheat
market in early 2013, as crop-threatening weather in key exporter
regions like Australia and Argentina are beginning to
prompt adjustments to output estimates from those areas.
Additional revisions to crop projections are likely in the weeks
ahead that could well set the stage for increased U.S. wheat
export potential in 2013 - irrespective of the state of the U.S.
crop as it rounds out its own growing season.
Should the U.S. wheat crop be found wanting in terms of quality
and quantity around that time, an upward bias to U.S. wheat
prices could well emerge, which would defy expectations for a
softening trend in the opening quarter of 2013.
So while traders may well be tempted to turn to their cornversus-
wheat trade right now as part of their year-end tradition,
there are reasons to take a more cautious approach this time
around, especially with regard to the short wheat leg of that trade.
A nexus of media, business and politics lies behind the country’s crisis, say critics.
…
In 2009 the country had 39 national daily newspapers, 23 national Sunday papers and 14 national weekly papers, according to an earlier EU study of media. Per capita, Greece has far more national newspaper titles than, say, Germany or the UK. The country also has nine national TV stations, six of them privately owned, and numerous private radio stations.
A 2006 cable from the U.S. Embassy in Athens, obtained by Wikileaks, noted: “How can all these media outlets operate profitably? They don’t. They are subsidized by their owners who, while they would welcome any income from media sales, use the media primarily to exercise political and economic influence…
…a Reuters study of recently-published accounts shows the top 18 Athens-based media companies have declared debts totaling more than 2 billion euros.
Here are some valuable “take-away” pieces that expand our understanding of seasonal patterns for grains, meats and soft commodities. Every year around the same time, real-world factors occur that drive the supply and demand cycles for commodities and their prices. Here is a list of seasonals (alphabetical) that affect the underlying contracts for the calendar spreads in Just Spreads…
Corn: Corn is the world’s most widely grown grain and the USA produces half of all the 800 million tonnes grown worldwide. This market’s seasonality can be divided into three time frames (basis the northern hemisphere): late-spring to mid-summer; mid-summer to harvest and post harvest. The most pronounced seasonal trend in corn is the decline of prices from mid-summer into the harvest period. Prices are often near their highest level in July. Harvest adds large supplies to the marketing system, which normally pressures prices to their lowest levels of the crop year. Prices normally rise following harvest. The “February Break” is a well-known occurrence where corn prices usually show some degree of decline during the month of February.
