Byers Commodities Canc 090527

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Commodities 102--a follow-up presentation regarding hedging corn, SBM and milk

Transcript of Byers Commodities Canc 090527

  • 1. Strategies with Corn, Soybean Meal and Milk Futures Prices Dave Byers [email_address] Galax, VA
  • 2. Background
    • Feed Cost Webinar: Strategies to Lock in Milk and Feed Prices
    • Archived: www.extension.org/dairy cattle
    • Presentation: www.slideshare.net
      • Todays presentation will also be available for viewing and/or downloading
      • Commodity report upon request no charge
  • 3. PRELUDE
  • 4. Got Lamborghini?
  • 5. Maria Bartiroma Interviews Jim Rogers for Business Week
  • 6. Outline
    • Market Analysis
    • Market Trends
    • Price Risk Management Strategies
  • 7. MARKET ANALYSIS
  • 8. What Lies Ahead?
    • The big question in the financial markets is, What lies ahead?
    • People want a financial crystal ball
    • What will the price of corn, SBM and milk be
      • 3 months?
      • 6 months?
      • 12 months?
  • 9. What Lies Ahead?
    • How would you like to have a copy of the WSJ one year in advance (i.e., May 27, 2010)?
  • 10.
  • 11. What Lies Ahead?
    • Nevertheless, there are secular systems that attempt to predict future market action
    • Two main schools in the financial markets:
      • Fundamental Analysis
      • Technical Analysis
  • 12. Fundamental Analysis
    • Looks at economic factors, known as fundamentals
      • Dollar
      • Acres coming out of CRP
      • Number of ethanol plants coming into production
    • In short, it examines the forces of supply and demand
  • 13. Technical Analysis
    • Looks at the price movement of a commodity and uses this data to predict its future movements
    • Technical analysts make extensive use graphs of data in an effort to make the invisible visible
    • Hence, they are often called chartists
  • 14. Key to Technical Analysis
    • Identifying a trend
    • In fact, technical analysis can be summed up in the saying, The trend is your friend.
    • TAs strongly adhere to the premise future price movement is MORE LIKELY to be in the same direction as the trend
  • 15. MARKET TRENDS
  • 16. Three Trends
    • Primary
    • Secondary
    • Minor
  • 17. Three Trends
    • Primary--tide
  • 18. Three Trends
    • Primary--tide
    • Secondary--waves
  • 19. Three Trends
    • Primary--tide
    • Secondary--waves
    • Minor--ripples
  • 20. Three Trends
    • For investors, it is most important to be aware of the direction of the primary trend
  • 21. Three Trends
    • For investors, it is most important to be aware of the direction of the primary trend
    • Corrections within the primary trend (the secondary trends) can be disconcerting and often expensive interruptions to one's position
  • 22. Three Trends
    • For investors, it is most important to be aware of the direction of the primary trend
    • Corrections within the primary trend (the secondary trends) can be disconcerting and often expensive interruptions to one's position
    • The minor trend is the one the public gives most attention to, yet the minor trend is least important to the serious investor.
  • 23.
  • 24. Secondary Trend ??? $63.00
  • 25. The Primary Trend: DJIA (2007 - 2009)
  • 26. Primary Trend and MAs
    • Moving averages often used to determine the
    • primary trend:
    • Grains
      • Long term MA = 65 week
        • - Above 65 week MA = Bullish Primary Trend
        • - Below 65 week MA = Bearish Primary Trend
  • 27. Primary Trend and MAs
    • Grains
    • Long term MA = 65 week
      • Above 65 week MA = Bullish Primary Trend
      • Below 65 week MA = Bearish Primary Trend
    • Milk
    • Long term MA = 65 month
    • Short term MA = 15 month
      • Above 15 month MA = Bullish Primary Trend
      • Below 15 month MA = Bearish Primary Trend
  • 28.
  • 29.
  • 30.
  • 31. "THERE WILL BE BLOOD!"
  • 32. $9.31
  • 33. Basic Tenets of Primary Trend
    • The extent and duration of the primary trend cannot be predicted beforehand
    • The primary trend will overshoot (farther than almost anyone imagines) $9.31/CWT
    • The primary trend cannot be manipulated
  • 34.
  • 35. OPEC
  • 36. The Primary Trend: DJIA (2007 - 2009)