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James,
Thanks for sharing and it helps in your confirmation what "not" to trade,
especially that maket, despite basically . . . everything one can imagine.
don ewers
----- Original Message -----
From: "James Alvis" <alvishsd@xxxxxxxxxxxxx>
To: "Omega List" <omega-list@xxxxxxxxxx>
Sent: Wednesday, November 28, 2001 4:31 PM
Subject: Re: Pork Futures (smithfield and pork futures)
> Anyone considering trading in the pork complex should be aware that,
unlike
> broader based markets that tend to lend themselves to technical analysis
of
> money flows, Hogs and particularly Bellies, are relatively thin markets
that
> are very sensitive to the cash price or more accurately, anticipation of
> what the price WILL be in the foreseeable future. When I traded these
> markets regularly, I was aware of the trading actions of one large local
who
> made millions of dollars each year for several years. While technically
> aware, this trader's edge came from an extensive network of close
contacts
> in each segment of the cash business. He spoke daily with a pork buyer
for
> a large grocery chain about retail demand. He had relationships with
> several packing houses that provided insight on when packers would be
buying
> animals to meet retail demand and when they might reduce slaughter to
force
> price increases in the grocery store. He regularly shared his market
> perspective with friends who were large pork farmers in return for
> indications of their current and future production and marketing
intentions.
> He then compiled all the info he gathered with known market facts
(including
> frozen stocks, foreign demand, seasonality, etc.) in a statistical data
base
> which compared current market conditions to previous ones. By accurately
> anticipating cash prices, he made lots of money on sizable positions in
the
> futures markets.
>
> Most traders in smaller, less liquid markets, particularly agricultural
> markets typically dominated by larger commercials, will never have the
> access to supply and demand information equivalent to those who deal in
the
> physical commodity. As a technical trader, I prefer markets like bonds
and
> indexes where broad participation mitigates against manipulation by the
few
> and the price charts can more reliably reveal the changing balance between
> buyers and sellers.
>
> Best regards,
> Jim Alvis
>
> ----- Original Message -----
> From: "Don Roos" <rosewood@xxxxxxxxxxxxx>
> To: "Omega List (E-mail)" <omega-list@xxxxxxxxxx>
> Sent: Wednesday, November 28, 2001 1:30 PM
> Subject: Re: smithfield and pork futures
>
>
> > Trading in an arena such as this (livestock) is actually less risky than
> > trading what most of us trade, the indices. The fills in the cme
> livestock
> > pits are very good, except PB (pork bellies) and the trading is very
> active,
> > even in outmonths.
> >
> > A good way to trade this type of future, if not experienced, is to
> consider
> > spread trading. One is more likely to be successful in starting with
this
> > type of trading than non-hedged trading. Using the guidance of a
seasonal
> > research, one can find highly successful trades that may not be as sexy
as
> > doing discretionary or system trading of the spoos or minis, but may
allow
> > you to keep your account in the black long enough to learn the ropes as
> well
> > as gradually learn discretionary methods. A good resource is MRCI,
Moore
> > Research Center, in Oregon. (No affiliation or connection, except as a
> > customer). http://www.mrci.com/ I was told by a highly successful
trader
> > that started as a spread trader and has used Moore for years, that I
> should
> > look upon the research and trades they recommend as a system to follow.
> The
> > difference is that Moore does the research rather than me (which is
> > appealing after spending over a year developing a system for emini
> trading).
> >
> > Good luck,
> >
> > Don
> >
> >
> >
> > ----- Original Message -----
> > From: "Robin Cotten" <rcotten@xxxxxxxxxxxx>
> > To: "Omega List (E-mail)" <omega-list@xxxxxxxxxx>
> > Sent: Wednesday, November 28, 2001 11:49 AM
> > Subject: smithfield and pork futures
> >
> >
> > 1. You can't depend on using just 1 live hog future. You need M to
> > represent the summer highs and you need Z to represent the fall lows.
> > This year the drop was 40% and this isn't uncommon at all. So at a
> > minimum, average the 2 months together.
> >
> > 2. While most houses need futures at 5400 to breakeven, Smithfield's
> > break even is probably more like 5000.
> >
> > 3. This all assumes that corn is around today's prices.
> >
> > Good luck,
> >
> > Robin
> >
>
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