I went short on December contracts for both wheat and corn. I had consulted a few sources (which are mentioned in the references section) and the lowering of prices was attributed mainly to higher value of U.S. dollar and downgrading of U.S. credit rating. This has in turn meant that importing countries are demanding lower U.S. exports. U.S. corn exports have slowed gradually to major buyers in South East Asia like China and Japan.1 As for wheat, it has been claimed that the lower price patterns in corn have had a spillover effect in the wheat market. To discuss more about the current decline in corn prices, one has to track back to the past summer to make sense of the present scenario. Firstly, the severe drought in U.S. earlier this year yielded low crop per acreage, which led corn futures to a record high of $8.31 ¼ per bushel. The high corn futures were further supported by the two USDA crop reports which came out since then and on both occasions traders witnessed a limit-up in prices. However, after this surge, the corn prices have finally been declining gradually since the last two weeks or so. I made the right prediction and gained $900 after incurring losses on my trades for some weeks!
Details for this week:
(1) Dec. (W2Z) – SHORT: Price In: 877, Committed: 2025, Gain/Loss: 662.5
(2) Dec. (C2X) – SHORT: Price In: 742.5, Committed: 1080, Gain/Loss: 237.5
(3) Equity (Last Week): 37537.79; Equity (This Week): 38436.84
References:
1http://online.wsj.com/article/DN-CO-20121025-017867.html
2http://www.thecropsite.com/news/12295/cme-corn-futures-closed-lower-thursday
