Spread Edge Capital specializes in seasonal spread trading across a wide variety of commodity markets. A spread trade is the simultaneous purchase and sale of the same commodity with different delivery dates.  SpreadEdge publishes a weekly Newsletter that provides several seasonal spread trade opportunities every week.

Overview

Each week the SpreadEdge Newsletter documents an extensive list of seasonal, technical and fundamental indicators for the various commodity markets.  This article will focus on the Grains and Softs and review the % carry yield and a technical analysis of Corn, Soybean Meal, and Arabica Coffee.  

% Carry Yield

Futures calendar curves vary in shape over time. Some often invert, with front-month contract prices exceeding those of later contracts, resulting in positive carry. Conversely, some curves exhibit contango, leading to a negative carry.  % Carry yield is the one-year calendar curve yield as a percentage of contract notional value.  Markets tend to reverse when they get at or near their highest or lowest levels over the past 52 weeks.

• Corn and Arabica Coffee are at their highest % carry yield for the past 52 weeks.  
• Soybean Meal is at its lowest % carry yield for the past 52 weeks.  Kansas Wheat is near its lowest.

Technical Analysis

• Front month Corn has rallied back to the downward trendline on a weekly chart.  Based on the extent of the move and the record high carry yield, Corn will likely struggle at this level…. Time will tell!
• Front month Soybean Meal continues to grind lower on a weekly chart.  Currently there doesn't appear an end in sight.
• Front month Arabica Coffee has completed a massive “head fake” over the past several trading days.  Coffee broke through the bottom of the trendline in late October and appeared destined for lower prices.  However, these past 5 trading days, Coffee has rallied over 9% and has moved firmly above the breakdown point.

More Information

Use coupon code “SpreadEdge” and get the Weekly Newsletter and Daily Alerts for $1 for the first month.  For a limited time, you can receive my Futures Training Videos for free with a 3-month, 6-month, or 12-month subscription.

For a FREE eBook about the SpreadEdge seasonal spread strategy.

The SpreadEdge Weekly Newsletter is published every weekend and provides a broad overview of the important seasonal, technical, and fundamental indicators within the Energy, Grains, Meats, Softs, Metals and Currency markets.  In addition, spread trade recommendations and follow-up on open trades is also provided.  For a free copy of the Weekly Newsletter, please send an email to info@SpreadEdgeCapital.com

Darren Carlat

SpreadEdge Capital, LLC

(214) 636-3133

Darren@SpreadEdgeCapital.com

www.SpreadEdgeCapital.com

Disclaimer

SpreadEdge Capital, LLC is registered as a Commodity Trading Advisor with the Commodity Futures Trading Commission and is an NFA member. Past performance is not indicative of future results. Futures trading is not suitable for all investors, The risk associated with futures trading is substantial. Only risk capital should be used for these investments because you can lose more than your original investment. This is not a solicitation.