This week I traded in wheat and corn after a long time and realized some gains. Apart from going by the information floating around the internet, I had also incorporated the basic knowledge of commodity substitution in my analysis while making the trade. The success this week has prompted to delve more into substitutable commodities. Thus, I plan next week (unless something unexpected happens) to make a trade in any two commodities which are substitutable, so that if end up gaining in one commodity it’s substitutable relationship with the other will further amplify the gains, or vice versa. Regardless of the result, I feel this would be a fruitful exercise as it will add on to my current knowledge on commodity patterns. As for how the wheat and corn will fare in the future market, I would have to analyze the export US wheat exports to big consumers around the world, as well, the expected increase in demand from Middle East and North Africa2. It is predicted that the U.S. wheat exports will increase substantially as we enter the New Year (2013) because at around that time the demand for wheat will rise and the world prices will go up, which in turn should increase the wheat prices in the U.S.
References:
2http://www.thecropsite.com/news/12295/cme-corn-futures-closed-lower-thursday
