After knowing more about the corn market, I reversed my position in the trading game. On September 19th, after I offset my long position, I short two contracts of December 2012 contract (C2Z) and two contracts of March 2013 contract (C3H) in the CBOT corn market. At the end of September 21st, , I gained (7.5000-7.4825)*5000=$87.5 per contract on C2Z and (7.5600-7.5100)*5000=$250 per contract on C3H. Total gain over the two days is $675.
Balance of my margin account is calculated by the sum of the initial margin (committed value) and the gain occurred. Since the initial margin for one contract of corn is $1080, the margin account has (1080*4)+(87.5*2)+(250*2)=$4995 in value.
In the week ahead, I still plan to continue to short on corn since harvest takes a few weeks. I would also like to short on soybeans as well because the harvest just started to kick off last week. Weather conditions are conducive for harvests with occasional light rainfall. In addition, higher-than-estimated yields and dampened demand from China may decrease the soybean price.
http://in.reuters.com/article/2012/09/20/markets-grains-idINL4E8KK0IO20120920
However, in the long run, prices are going to feel the pressure. People are also keeping an eye on the corn and soybean planting conditions in South America. If everything goes well, the world’ corn and soybean supplies are going to be replenished in early 2013.
http://in.reuters.com/article/2012/09/20/markets-grains-idINL4E8KK3TU20120920
It looks like you’re starting to get a handle on all the ebbs and flows of the corn market! It also looks like you’ve learned a valuable lesson about not being too hasty. I’ve gotta say you’ve got more guts than me committing to 4 contracts! I could only bring myself to buy one for the first round of trades. The second Reuters article you posted is great! Thanks for posting!
Clear explanation on the calculation. Looking forward to your next posting 🙂