In this episode of Tech Talk, Andy and Cody discuss CME cheese, the Nov:Dec class III spread and March corn.
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Future trading involves risk and is not suitable for all investors. Content provided in this segment is meant for educational purposes and is not a solicitation to buy or sell commodities.
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Hello everybody. Welcome back to another very special episode of Tech Tock Halloween Edition. I am Team Winnie the Pooh and with me from a Galaxy far, far away. Mr. Darth Vader. And his, incredible.
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Hang on. My capes all messed up,
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Mr. Vader, we appreciate you being with us today. Taking time out from your, you know, tromp around all the galaxies far, far away.
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You don’t know the power of the dark side.
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Obviously I don’t, but we’re going to learn today.
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What’s your costume supposed to be?
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Well, I’m Winnie the Pooh. Found this at the thrift store for $10. But who did you think I was when you showed up?
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I thought you were a Pikachu.
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So there we go.
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Okay, this is the most impressive. Showing me, Because the galaxy.
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If Astrum doesn’t do that, any of them. I got ears of mine. That’s about it. I think we have a few requests.
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So.
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We. Two requests, three charts, two requests.
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So let me see if I can do this. Through this, through this helmet. Here. You ready?
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Give it a shot.
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All right. So this first one came at request and it came in peace. They did that oldie but a goodie came over from on request from goodie. Oh how about that.
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A friend of the show in.
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Front of the show. We’ve had him on before. Yeah. See me. Geez, all of a sudden we’re back on this low end here. I don’t know, what do you think that we did with that? Didn’t move any of this stuff from last time we looked at it. We had this little, little Papa Ruski here up to 205 and then back down to potentially fill in this gap down here.
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What do you.
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Think? I think it’s going to happen. We were looking at a couple other charts. It seems like next week, by about the eighth of the 10th of November, is when we really start falling off the the cliff here for class three and cheese. And that is next week. What we got Thursday Friday is time frame. So I think we get a quick rally probably up to that $2 mark then like you have here the head and shoulders probably plays out.
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And maybe a quick trip to a buck 65 down there at your gap.
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Yikes. Let’s take a quick peek at that. You know, let’s just send another wine, shall we?
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Send some more. Let’s just go pop.
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One more in there. So that’s about 167 166.
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Yep.
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So the interesting thing about all this is that the futures market is certainly not saying that that’s what’s going to happen. All right. We just took a quick look at futures. And we’re were just back above like $1.90 ish. Right. Right. So I don’t know I mean it’s interesting right. And so what do we start the new month here Friday.
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Right. Drag Thursdays all the way on Fridays in a month you’re going to have potentially some previous month buying that shows up. You know folks that want to own based on October surprise. Right. Because there is this big obviously break between September and October. Does that bring in some some new buying that shows up at the beginning of the month?
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That kind of gives us a little bopper and cheese. It feels like that’s the case. Futures are starting to tell us that.
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Well, that’s why I think you get to that quick little run up higher, maybe even then the next week or the week following. But it seems like around that 10th, eighth, 10th of November is when we really get everything bought. I think for the holiday, demand is pretty well behind us at that point. Really creeping our way lower.
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And I mean I hate to say it but to get exports out probably best case scenario is going to be a buck 67 to fill that gap. Don’t you.
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Think. Yeah for sure I think you got to be mindful of this higher at year 205. Right. Futures are starting to tell us that we’ve got some more strength here in cash potentially kind of brewing. Right. November is on its third week of pricing and it’s bumping up against two bucks even with today’s price action. Right. So November is is certainly acting like if you believe we already have a few weeks baked in call it like low 20 bucks.
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Check out bases loaded, by the way, with our good friend Joe to learn more about that. But yeah, no, it’s it’s acting like you’re going to have at least some more strength in the cash market to justify like, current levels, right? Doesn’t have to be much to let’s the other thing doesn’t have to be a lot right now taking us back to 205, especially when you think about how much the barrel’s broken, right?
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I mean, just a slightly you’re talking about a very small retracement, barely anything. So it definitely feels like it’s in the cards.
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I mean, $0.12 higher from here and we’re at two bucks. I think that could be done in a very short amount of time. To your point.
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All right. So sorry I had to bring a little next chart also at request from our good friend Joe.
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Shout out to Joe.
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Shout out to Joe. Know these class three feature spread. The chart itself is taking the November price minus the December price and charting that price action on a day to day basis. And this is a daily. So when we see positive 35, that means November is trading 35 points premium to the December. Any thoughts on this chart here?
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Well, it looks like we rounded out last week down there. -18 and up. I mean both of them were pretty much trading at 20 bucks getting into Friday. And today we’ve got December sub $20 a little bit I don’t know. It looks like the chart kind of wants to work its way back to a dollar.
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So when I asked Joe where he felt like this was going to go, he said 110. So how about that?
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There you go. 110 meaning to your point, November $1.10 priced above December class three.
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Yes, sir.
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Alrighty.
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First of all, let’s go throw that price out there. You said a dollar 110 will split at 105. Okay. And what’s interesting is that that is basically smack dab in the middle of all this noise, right between what is the 64 and one half.
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Yeah.
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So I mean, I would agree. I mean, it seems like when, when, when it crossed this threshold right here, it really started to break. And so this, that price unto itself becomes somewhat of a magnet. Right. And getting back to a dollar doesn’t even mean testing this former like failure to make a new high. So you’re getting back into all this consolidation.
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So I agree I mean and the momentum is starting to shift. Right. Here’s the momentum. It’s about it looks like it’s about to cross zero. If it does yeah that’s a that’s a surefire sign that that thing can go trade a dollar. And if it were to go trade a dollar. So that means November would continue to gain on December.
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But that also points to our theory that cheese has a run at back above two bucks. Right? Right. Because if we’re going to run it above $2 now during November’s pricing, it’s likely to impact November the most likely, right? I mean, who knows.
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Correct. So in this instance for for trading the no of the spread, you would want to be long November short December.
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If you felt like this was going to go back to a dollar. That’s correct. You would be buying the November selling of December simultaneously at a ratio of 1 to 1.
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Don’t make me destroy you.
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Well, let’s hope this chart does not destroy us.
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But that’s it. I mean, that this I think this I think this chart is a nice little like, supplement to what we just looked at on the cheese basis. Yeah. Right.
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But legs behind what we were talking about.
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Yeah, exactly. I mean it’s, it’s I think it actually helps confirm because what we’re seeing out of the futures market is telling of what the cheese market we will what our theory is about the cheese market. Right. We feel like cheese has gone up. The no D spread is certainly acting like cheese is going up today. For now or something like that.
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What what types of ten 1110. So we got another hour for the cash market here to the right. We’ll see. So this this last one you want to look at this one.
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Yeah. Let’s a look at March corn.
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Winnie the Pooh Pikachu. He’s interested not in honey he wasn’t looking at March corn man.
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I mean, when I was looking at this earlier, I thought we were going to make a little bit of, a w here in March. You got to watch 450 back down to 415. Kind of getting back to 50% there. I thought we would have had a little bit more of a break to lower side back to 415.
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And we still could I mean, I guess we haven’t quite engulfed yesterday’s trade completely. We tried this morning but failed so far and it is 10:00 central time, so there’s a little bit more trading to go in the day, but it just kind of looks like a long term. W is taking a little bit of formation here in March.
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Corn I would agree. And what’s interesting about this kind of like price point is that when I think about like I just I was drawing these while you were chatting there. Yep. That’s like 415 for 20 area. The market more or less started to break out here right from that price. Try to get back below. It failed. Kind of took a stab at it here.
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Not quite failed. Definitely try to get through here again and failed. Right. So this 415 for 20 area. It’s a price where the market seems to want to at least find support for the time being. That’s so that’s so again it’s it’s kind of like your area like you said you’re looking at own. It sounds like.
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Well yeah I would say take another stab at owning some. And I think like we talked about last week, if you tried it here, you know, you’re wrong at four, 15, $0.10 away. Right. Yeah.
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You know where you’re wrong. I mean, if it closes back below this low. Yeah. What is this low right here for 14. This low right here is basically for 16. If you get below that price and close there I think that it’s you know you now you’re talking about getting back down to this like darn near $4. Right.
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So your risk reward, it’s I guess the I guess the question is what’s the potential reward. What do you feel like the reward is if you own corn today, you know where your risk is down to, like a 415. So it’s about a dime. Yeah. What do you feel like the reward potential is here?
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I think the reward potential is going back to 450. Right. That high that we saw beginning of the month. I mean, I don’t know, with everything going on harvest wise, if you’re going to get much of a rally up to $5, but just being protected from here up to 450 going into the end of the year, right. This is where I see the reward coming out.
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And really to let’s just take a little gander, if you will, for double. Right. Wow. So 455 for double nickel. That’s basically 50% retracement right of this big move. So yeah I mean that’s a significant retracement don’t get me wrong. But it’s still we’ve seen it plenty of times where the market has retraced a third or a half of a significant move.
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Yeah. So to your point about like the risk reward, you’ve had this substantial break already. So you’re expecting that you’re going to meet with new selling below. You know, after we’ve had this big break, it seems like there’s likely been some profit taking that’s taking place. Right, right. And now you’re you’re looking for folks who are, are we going to find new selling sub like for 15 for ten.
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That’s the question. Right? Right. Conversely is there room for the market to see it more of a retracement I would agree with you. I think 450 I think 450 is definitely in the cards and it’s kind of like that. What would that be? You could theoretically bake $0.25 risking a dime. That’s a two and a half to one shot, right?
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But to me seems like a good trade tracker.
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And together we.
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The Galaxy with trades like that. I mean, you can roll a galaxy that I want and March quarter one on.
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If you wanted to add on to logs. And let’s say we get down to that low of 400 to, do you think you would add some more long positions at that point also?
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I think so if we’re just talking about it’s like a trade perspective, right? You probably would have picked, you know, punted once we got below 415 living. Right. So now you’re flat. So taking another shot being long at that price, I mean you start to see some consolidation around that four bucks. Sure. I mean like at that point, you know, again your, your, your risk is that we go into new contract lows which wouldn’t be that far away at that point 3 or $0.04 or something like that.
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So yeah, I mean, I think you kind of run into that no man’s land between 415 and 4 bucks. Let’s see how goes. So yeah, I mean, you’d take the loss and then you just got to sit on your hands until you get there. At that point that who knows? I love it when like, you know, I think what’s the what’s the expression I have I don’t have bad luck.
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I’d have no luck on my luck and go into like 412 at all and then probably back to four quarter. You hope you didn’t. That would’ve been at I mean, if anything’s gonna make me go to the dark side of that.
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Quarter usually does. Corn usually does. All right. Awesome. Well, Mr. Raider, you got big plans for this Thursday. You’re going to go around ruling the galaxy over there and, the hometown. What? He got, what he got happening. We’ll say it’s fair enough. We greatly appreciate you taking time out of your busy day to come hang out with us.
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Talk charts. Let the people know what you’re seeing. It’s greatly appreciated. We want to give a big shout out to Adam. Big shout out to Joe for calling in with their, requests. We hope everyone has a great thank. No. What is it?
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It’s Halloween.
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Halloween? I’ll just jump from there. Has a great Halloween this Thursday. Get lots of candy.
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No doubt. On the dark side.
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Oh, and with that, everyone have a great holiday. We’ll see you next week.
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You know, I will say, though, I do appreciate you wanted to be a part of Thanksgiving because most people skip from Halloween straight to Christmas. I know they forget about Thanksgiving.
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You got to give turkey its respect, right? Because we just jump right in between.
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Right into Thanksgiving. I mean, it’s like hallmark movies go from like fall and fall.
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Block Cheese: $1.6400, unchanged, 4 lots tradedBarrel Cheese: $1.6150, unchanged, … Read more