Ariel Kagan: UBC MFRE 2013/14

Week two, what’s going on?

So week one, it turns out, was the easy one. Clear news events (i.e. the crop report and the fed news) made trading decisions and market fluctuations fairly clear (despite the fact that I did not read the signals correctly, and lost money). Week two is shaping up to be much more opaque. Corn was down, soy was up, then corn was up, and wheat shot through the roof! In a scramble, I covered my two shorted positions on wheat and corn, but not before losing thousands of dollars, and then bought corn and wheat in an effort to recoup just in time for the markets to slow, and I ended up losing money again! I have no idea whats happening! Here’s where I stand:

Two long contracts on wheat that are FINALLY getting me a return (.07%!!!!)

Two long contracts on corn that are still losing money, don’t ask me why (-.33%)

Three long contracts on soy that I thought were a good idea, but am being proved wrong by the hour (-.41%)

Overall I’ve now lost $2,473. Ouch.

Honestly, I haven’t been very on top of the market this week. But at the very least, I seem to be in good company.

“…for row crops, movements are proving less easy to predict, with corn, for instance, opening the last session firm, but ending strongly lower without any apparent fundamental justification.” says agrimoney.com of this week’s market movements.

So within the insanity, I’ve decided to settle in with my current trades and just see what happens. Part of this decision is due to frustrations, specifically:

a) The time delay in trading: As I watched corn prices on the rise this morning at 8:30, I quickly jumped to stocktrak and tried to jump on for at least a day trade gain. By 10:45 my trade still hadn’t gone through, for whatever reason, and the prices had declined. By the time the trade went through, I was again, losing money. Not so fun.

b) Similarly, I tried to buy corn while holding a short position on corn simultaneously. This made sense to me- I could buy corn for the day and sell it later to make a quick profit, but hold my short position in the long run if corn were to decline in price later in the week/month/year/era. However stocktrak doesn’t let you hold a short and a long position on the same commodity. Is this true in the markets? I feel like it shouldn’t be. So sadly, I covered my corn to be able to buy it, and as explained above, lost money anyways.

While I don’t know much about what’s happening this week, there are some things coming around the bend:

1) Monday is the last day of the month and is also the day that the USDA releases the next crop report. There should be lots of activity as funds try to balance their books for Oct 1 and also in reaction to the next report. Which way that activity goes is anyone’s guess.

2) Frost in Argentina, wheat shortage in Russia, floods in China, and drought in Brazil. I’ve been reading articles about all these scenarios and what their impacts will have on commodity prices. The consensus is that no one knows. So, helpful.

3) US Government Shutdown looms on October 1st. The markets in the past have reacted strongly to scares of shutdowns, although the last time this happened, the markets pretty much ignored it (boy who cried wolf; Cruz who cried Obamacare). So while my friends in D.C. are planning their vacations for next week (Federal employees are not allowed to work in the case of a government shutdown), I’m watching the corn charts. Somehow I feel like I got the short end of the stick.

Primary feeling of the week: The Trend is Your Friend is a terrible rule, unless of course, it’s not.

FINAL THOUGHTS: As we enter October, and fall is officially upon us, I encourage everyone to lean in to pumpkin spice lattes, apple scented candles, and watching reruns of Hocus Pocus and Nightmare Before Christmas.  As Jack Skellington asks, “Something’s here I cannot see! What Does it Mean, What Does it Mean!” Very relevant this week!

25. September 2013 by akagan
Categories: Confusion, Futures game | 1 comment