URL: http://futures.tradingcharts.com/news/futures/Corn_pulls_market_sharply_higher_186384743.html

The reason I choose this short news is that it explain how big I lost in short a wheat during the past week. Also supply some directions for looking new information.

As shown in the news, corn push a sharply price increase in wheat, especially in wheat – almost jump from about 850 to 900  At the same time, corn futures price also shrink more than expectation of this summer. I would think that’s because the drought on crops will destroy some supply, then the demand is stronger than expected demand, i.e. the market become very tight.

“Corn futures were limit up, and the corn consumption from June to August was 15 percent smaller than the same period a year ago.” After simple calculation, the price of corn increase 5.29 percent. While, wheat futures ended up 5 percent increase in price, and the consumption increase 27 percent. That’s very interesting. As we know, farmers would like to use wheat to feed their livestocks when corn is expensive. In this case, the increasement of consumption at both corn and wheat shows this rule. And the price increasement is almost the same amount – shows the high correlation between corn and wheat.

Reference:

1. http://af.reuters.com/article/commoditiesNews/idAFL1E8KSBZ820120928