Darn, the Quarterly Pig Crop report by the USDA showed more pigs than I expected. Commentators say it's marginally bullish, but not enough for me. I'll close that position out Monday.
The USDA crop & pig reports show how game theory really does explain some human choices. The farmers planted too much corn & raised too many pigs. By just planting 5% less corn and cutting back on pigs a few %, the prices of both would have risen sharply and farm profits would be much larger. But without coordination, each got a little greedy, so all will earn less. That's the lesson of the Game Theory example of "The Prisoner's Dilemma". Without coordination & communication, competitors will make individual "optimal" decisions that collectively cause them to earn less than optimal amounts.
Well, I don't have many commodity positions left now that the news is out. Some marker positions in coffee and sugar and those December corn calls I have left from the straddle. My account is up 28% year to date - that's good, but I was up 35% at one time. Oh well, you always lose some when the trend changes. But getting out saved that 28%. Time to start looking again.
PS: I had two successful hog plays earlier this year, based on lower weights caused by high feed costs. The rationale behind this play was lower breeding for the same reason. That might still show up later. February's cold weather might have hurt conception rates. I'll monitor it for a future play.
PPS: clarification - the 28% gain is in the commodity account. The stocks are the Alpha Fund and the Krypto Fund which I manage separately with completely different tactics & strategies.
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3 comments:
bunkerman, what is your rationale behind a bullish position in coffee?
I'm not really "bullish" on coffee near term, but I think a bullish trajectory might be on the way. The daily chart is poor, but seems like it's fulfilled the target for the recent head & shoulders top breakdown. The monthly nearby chart looks to be near trendline support. Next year's Brazil crop is expected to be smaller. The beefers (excl. index funds) were short but are covering. The coffee market is very explosive. I think it might be getting set for that sort of move. I want a marker position that I will add to if some good events start happening in it. Not recommending it, I'm just disclosing what I have.
By the way, it's a similar rationale for sugar with different facts.
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