Freeze warnings in Florida, why isn't oj reacting? Maybe to well predicted and already in the market????
I corrected my verbiage in the underlined text below.
Thanks very much, cutworm!
This was an EXCELLENT TOPIC TO BRING UP!
1. The biggest reason is that temperatures will not be cold enough for major freeze damage. It needs to get into at least the mid 20's for major damage. Although there are FREEZE WARNINGS, there are not expecting a HARD FREEZE.
2. Almost as importantly, citrus greening in FL has killed off most of the production.
3. Sao Paolo, Brazil produces the most of any country in the world for oranges now.
https://www.fas.usda.gov/data/production/commodity/0571120
This was a thread about it with more details:
Dangerous time to trade/OJ
20 responses |
Started by metmike - Oct. 3, 2024, 1:19 p.m.
Here's more:
By Karen Braun
Re: Re: Re: Re: USDA October 12, 2023
By metmike - Oct. 12, 2023, 8:43 p.m.
Re: Re: Re: Re: Re: USDA October 12, 2023
By metmike - Oct. 12, 2023, 8:51 p.m.
Great one, cutworm and always fun to watch this video clip again, even though the oj price goes thru several limits in a few minutes!!!
Bonus: The Eddie Murphy Rule
One interesting kicker to the story: Trading commodities on inside information obtained from the government wasn't actually illegal when the movie came out, but it's illegal now. It was banned in the 2010 finance-overhaul law, under a special provision often referred to as the Eddie Murphy Rule.
Here's the latest weather that includes forecasts for Florida.
25 years ago, this probably would have inspired a bounce in the OJ, when production was something like 10 times greater.
Current Hazards at the link below.
For your NWS and county, go to the link below.
Then you can hit any spot on the map, including where you live and it will go to that NWS with all the comprehensive local weather information for that/your county.
Here's what the colors on the map above stand for:
This is from the #1 OJ producing county in Florida:
https://forecast.weather.gov/MapClick.php?x=114&y=163&site=mlb&zmx=&zmy=&map_x=113&map_y=163
Temperatures tonight are not likely to get much below the upper 20's and just above the threshold for damage.
https://www.lsuagcenter.com/profiles/clirette/articles/page1611248225640
If temperatures are predicted to dip below 26-27 degrees for an extended period of times (more than 2 hours), then you should protect the tree.
I'm sure there was no freeze damage overnight. The market was not expecting any. One can possibly make a case that we had a bounce from the lows earlier this week from speculators buying ahead of the very light freeze but if that were the case, we would be back down to the lows now after having no damage overnight.
https://tradingeconomics.com/commodity/orange-juice
1. 1 week: Still above the lows from earlier this week
2. 1 month
3. 1 year: Sharp down trend. Bear flag/wedge from April-September, followed by a downside breakout. Price dropping from 500 to 150. Bottom to just below 150 in late November. Is this another bear flag or THE bottom?
4. 10 years. September 2024 peak of 550!!!! Obliterating previous highs by an extremely wide margin!!!! Extreme steep downtrend since then. Back down INSIDE of the previous 10 year range(below previous highs). Are we holding a longer term uptrend or is this another bear flag.
OJ is VERY thinly traded. It's likely the extreme highs over 500 caused price spikes to consumers that were great enough to cut back on demand(the cure for high prices is........HIGH PRICES) Compared to being high enough to generate more production/supply(it takes years for newly planted trees to produce oranges).
The total volume for the front month March contract for just this trading session, just before 10 am CST is 171 contracts with an open interest of 6273!
Most of the high volume commodities average more volume than that EVERY MINUTE during most of the day trading session!
Front month, February natural gas, which I've traded several times this month has almost 70,000 contracts traded in this session(that started at 5pm yesterday). That's over 1,000 times more volume than front month orange juice!!
Open interest is being rapidly liquidated in this front month of natural gas with looming expiration. It's down to 90K while March, the next month is up to 361 K in open interest.
Volume in OJ was much higher 25 years ago. I told the story here about the time I was long 200 contracts of front month OJ over a weekend 2+ decades ago and was WRONG about the freeze and had to get out on Monday morning. It was a big loss of course but there was much more volume back then compared to today and not as bad as you might think. I'll see if I can find that and post it on the next page.
I picked this spot in Florida orange country because, following the weather for years down there during potential freeze season, I remember it always had the COLDEST readings during freeze events.
Last night, the temperature dropped down to 28 degrees F. That did no damage. In fact, temperatures that drop to around 32 and a bit below help to make the oranges a bit sweeter.
Another item that I just remembered. Much of the orange crop has already been harvested! I'll try to get more on that in a minute. It's been 2 decades since I actively traded OJ but it was excellent for cutworm to start this thread:
https://forecast.weather.gov/MapClick.php?x=114&y=163&site=mlb&zmx=&zmy=&map_x=113&map_y=163
https://www.pickyourown.org/FLcitrus.htm
As you can see above, much of the crop has been harvested already even though the size of the crop is tiny compared to 2+ decades ago as the result of the citrus greening BACTERIA disease destroying the trees. Originally, it was thought to be from a virus.
Re: Re: Simple(ton) Fundies - OJ's a BUY!
By metmike - Jan. 31, 2020, 11:40 a.m.
The total volume so far today for the March OJ contract is 287 contracts traded.
I remember one year almost 20 years ago when I bought 200 contracts of OJ on a Friday before a freeze threat in early January.
The freeze did not do any damage/cold was less on Monday and I had to cover. Volume was thin back then but several times what it is today.
OJ is $150/c for each contract. 200 contacts is $30,000/c
This must have been early 2004 because I was in close touch with Greenman in those days and he was curious how I was going to get out with the total volume in 1 day back then probably around 1,000 contracts.
I just had to bite the bullet and take the loss ASAP to not make it even worse because the entire reason to be long was gone.
Rather than just place a market order to sell everything, like would have been the case for any other market and know that big buy orders below would take care of me, I did price it at a price that I guessed could fill me.........well below the known bids.
Doing a market order on the open that big in oj could have caused it to open 10c lower and be a $300,000 loss.
So obviously my order hit alot bids on the way down to over 3c lower on the open. Luckily, prices had already plunged before that and there were some pretty big bids from entities that considered those low prices as value.
My account was huge back then(not any more) but it took a nearly $90K hit that day because of being wrong about the weather in Florida. However, the question is often not did you make a really bad decision entering a trade but did you make a good decision exiting the position.
If OJ had come back to unch that day, after my order pressured the price lower on the open it would have been devastating. That's all I wanted that day.
"Please don't lget OJ come back now" "Please don't let OJ come back now"
So OJ closed LOWER than the lowest price that I sold(to cover) and I was happy.
OK, not exactly happy but happier than I was when the day started.
++++++++++++++
I see you MetMike, bidding nearly 200 contracts on May OJ~!~
Started by hayman - Feb. 24, 2020, 11:23 a.m.