Grains offer long opportunity by thinking short

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					Grains offer long opportunity by thinking short
Bill Biedermann
Futures; Jun 2010; 39, 6; Docstoc
pg. 26




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Description: The grain complex has been pretty boring since the huge moves of 2008 as prices have steadily declined further after tanking from the mid-2008 peak. Soybean futures reflected a significant speculative price premium throughout the spring. Traders argued an Argentine/Chinese trade dispute as a bullish reason to think China would buy more US beans and force US stocks into shortage status. Selling futures is always the least costly position to hold. However, a short call-long put position may be the best play. This position has reduced exposure to market volatility without sacrificing profit potential. With a large trading range expected in corn, employing sideways technical programs might pay off. Allendale's research has projected world stocks in the 2010-2011 will decline 5.8% to 184 mint but these are still very large stocks and exceed the five-year average stocks of 152 mmt. Thus even with Allendale's forecast for tightening stocks in 2010/2011, the supply overwhelms demand.
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