We started the year on a positive note with a gain of +1.51%. This result occurred in spite of our Live Cattle spreads underperforming and also the Eurodollar curve flattening during the month. We would like to remind you that the strategy is not directional, so we did not benefit for the big directional movement of January. We are proud to say we still has a low correlation to the S&P 500, just 0.01%.
This month we expect similar movements in the energy markets as January as well as good seasonal movements in the hogs. Looking to the Crude Oil markets, we see opportunity as Cushing, Oklahoma still has a large supply of crude oil, close to its max capacity. This situation will hold a bit more, favoring the contango. We will set up new trades in order to benefit from this situation.
We are also seeing good opportunities in the cattle market, but we will need to be more cautious and chose our entry and exit points wisely. Based on the USDA data we are going to have less cattle ready for the market during this year.
Also, if we look at the number of cattle on feed we see that the situation is similar to the previous years, but still a low number
The spread market is strong, but we expect same corrections on the long end on the curve. The grains are quite normal for this time of the year with winter in USA and Russia. The weather situation in Latin America is normal, and the harvest is under control. We see same accumulation of boats in the ports of Brazil but this is normal.
The market normally is quiet in February, so we are here just looking for new opportunities to trade. As always, if you have any questions please do not hesitate to contact with me.
Thank you for your trust.
— Gregory Placsintar
— Miguel Sanz Castello
THE RISK OF LOSS IN TRADING COMMODITIES CAN BE SUBSTANTIAL. YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.