The Road Ahead:
A decline in corn imports by China will remain this following week and drop the corn future price. China’s huge corn production this year from August to this month, and beginning stocks are sufficient to satisfy domestic demand. The country will still import supplies to build its reserves, but import demands will be so much less than before. Furthermore, US predicted that the country will not have corn stock out even though there were severe drought losses and tight beginning stocks. The weather forecast predicted light rainfall for this weekend and heavy rain for late next week in the US plain. As this month is the time for seeding red winter wheat in US, rain in the forecast for October will boost prospects for seeding and harvesting from May to July next year. Based on this information, I predict that the wheat future price will decline. However, soybean future price is expected to go up this week. According to Statistics Canada, Canada’s canola production is way lower than farmers expected. This decline in canola production provoked the fear that global oilseed stocks will be cut by the canola crop reduction. The demand of Canola has been shifted to other oilseed such as palm and soybean. Palm oil price eventually went up and the export tax on palm oil would make it even more expensive. That is why I predict that more oilseed demand will be shifted to soybean and its price will increase. Therefore, I would like to be in long position in soybean and short position in corn and wheat but I will not order more than one contract for each grains this week. USDA will update its forecast of the corn and soybean harvest on October 11. This update will change all corn, wheat and soybean future price.
http://www.cmegroup.com/education/market-commentary/ag/2012/10/daily-corn_1191.html
http://www.cmegroup.com/education/market-commentary/ag/2012/10/daily-corn_1191.html
http://www.spectrumcommodities.com/education/commodity/statistics/wheat.html
Hi Cindy! It seems that you have done research on each of the three crops.Nice work!
Since I haven’t traded wheat yet,I want to focus my comments on corn and soybeans.For corn, I’m glad to see that we chose the same strategy,while I have diffenrent views from you in soybeans respect.
It is true that as one of the subtitutes with canola, soybeans price is likely to be boosted by an reduction in canola.But I think the subtitute effect has been overestimated.As far as I know,more than half of soybeans crop has been harvested at a well faster speed than average years,which will gurantee a large part of soybeans supply. Meanwhile,there are news from Brazil, the second world’s largest soybeans producer,saying that Brazil will increase its soybeans plant areas and expect higher production next year,which I think can drag soybean futures down,too. Most important of all, the canola news was released on last Thursday, and then the market had already reacted to the news for two consecutive days,pushing up the price a lot. I don’t see the canola thing such a huge “mover” that can boost soybeans futures for another week long when there are other big bearish news at the same time.
Hope for your comments back~
Mike
Hi Mike!
Thanks for your comment!
I thnk you are an expert of soybean trading !!
This is my first time to trade soybean,,, I hope it really works well.
I have been so scared to do any trade for soybean, becasue soybean market price fluctuated so much.. But, I am pretty sure that both corn price are going to decline because of rainforecast and larger stockpiles than expected. And wheat price tightly move together with corn price. So, I think that wheat price will decline too. Furthermore, USDA will update its report about corn and soybean harvest. So,we should keep an eye on its update 🙂
Anyway, glad to see your comment 🙂
Have a good night and see you in class tomorrow 🙂
Thanks for you reply! I’ll enter wheat market to give it a shot in next few weeks. Wish Good luck,Cindy!!