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Wheat The Next Big Commodity Trade

Every year there is always one of the commodities markets that makes that huge commodity trade. There were years in which Wheat and all the various grains were the big winner in the commodities markets. The question is, is Wheat lining up to be this years big commodity trade for trend followers? Commodity future traders do not trade their opinions but rather price action. What spurs price action…Price movement.. throughout the world droughts are occurring a regular basis. This reduces the supply of crops such as wheat. Simple math…reduced supply…same demand…increase prices…reduced supply and increased demand ( China, India or whoever else) possibly a massive BIG COMMODITY TRADE. Look at this excerpt from Bloomberg
June 29 (Bloomberg) — Argentina, the world’s fourth largest wheat exporter last year, may withdraw from world markets for the first time in at least a century as drought reduces plantings.

Continued dry weather until September will probably cut the 2009-2010 harvest to as little as 6 million tons, a 28 percent decline from the previous season and equal to the amount consumed by local millers, said Eduardo Anchubidart, an economist at the Buenos Aires Cereals Exchange.

“The situation is now getting dangerous,” Anchubidart said in a telephone interview. Argentina has exported wheat since at least 1910, when records began, according to the exchange’s statistics yearbook.

After reading stuff like this…and with all of the money spent on the stimulas plans…isn’t it possible there can be a big move for trend followers and commodity trading advisors?

Andrew Abraham
www.myinvestorsplace.com

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Andrew Abraham

Andrew has been in the financial arena since 1990. He is a Registered Investment Advisor ad affiliate of Abraham Bedick Capital. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

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