Low wheat supplies from other countries will cause the US wheat futures to go up this week. Russia, one of the main exporters of wheat, has been suffering from drought conditions that have dropped estimates of this year’s harvest. Russia’s Ministry of Agriculture estimated that 80-85 million tons of grain will be harvested which is relevantly small compared to 94 million taken in last year. Argentine wheat production also will fall sharply this season because farmers planted less due to export quota.  2012/13 wheat production, which will be harvested next month, will be 10.12million tonnes, dropped by 28percent from 14million tonnes produced last year. Furthermore, Ukraine’s Ministry of Agriculture announced that an export ban on wheat will come into effects from November 15.  Ukraine concerns that stocks are becoming more scarce on the domestic market due to poor harvest. Therefore, I expect that more demands of wheat will be shifted to the US market and then US wheat futures will rise. Wheat futures will pull corn futures high, but corn prices will change depending on up-date information of USDA on the supply and demand of wheat and corn. Thus, I will take long position of wheat and corn this week and I will offset both short wheat positions on the first day before the rally in wheat futures come.

http://www.brecorder.com/markets/commodities/america/85668-new-argentine-corn-wheat-rules-help-farmer-sales-.html

http://www.businessinsider.com/the-worlds-biggest-wheat-exporting-countries-2011-4?op=1

http://rbth.ru/articles/2012/07/29/russia_to_cut_grain_exports_by_half_16793

http://online.wsj.com/article/DN-CO-20121024-015116.html

I predicted that both corn and wheat future prices would go down this week and I was right. As both corn and wheat future prices had increased for the last 2 weeks, I thought that this week the price would decline. It is the basic trend in future prices that a decrease in future prices is followed after the price rises and vise versa. The weak export demand was also one of the reasons why I took 4 short positions of corn and wheat. Export demands of corn from China and Japan, large importers, have fallen. According to U.S. Department of Agriculture, net export sales of corn were 142,300 metric tons which was way below the level that the analysts had expected.  Ethanol productions have fallen off and the demand from livestock farmers have been weak. These tepid corn demands lowered corn futures and wheat futures also decreased by pressure from low corn futures price. Both grain prices move together because they are fed by animals. I did offset two corn short positions but not wheat because wheat price didn’t decrease significantly from the price I went market in.

1)      Forexpros

http://www.forexpros.com/

With 63241 members and networks with 17 countries, Forexpros is a one of leading and credible global financial portal that constantly launches innovative features and optimal one-stop source for reader. As Forexpros is financial market world wide website, it includes information relating to the financial markets such as real-time quotes, financial news, and technical analysis. It also provides in-depth information on Currencies, Indices & Stocks, Futures and Options and commodities. Furthermore, Forexpros shows weekly outlook, 135961 professional analysis and opinions on grain futures, so I believe that the site is helpful to predict what will happen to the grain futures.

2)      Barchart

http://www.barchart.com/

This website is another provider of price quotes, charts and technical analysis for commodities, futures and options. It includes up-to-date market news, futures&commodities news and daily chart of the day report. Futures Market Overview section includes Futures Market Snapshot, quotes of commodity futures Markets, futures heat map and full list of major commodities to provide readers with easy-to-understand information.

Barchart Futures Market Heat Map

Some bound effects of huge decline in the prices of corn, wheat and soybean are expected this following week. Nevertheless, I predict that these prices will start to rebound slowly because of low exporting sales. Then there will be negative changes in price early next week but not as much as last Friday. Argentina, the world’s No.6 wheat exporter and No.2 corn supplier after the United States, modified corn and wheat export policy to increase purchases of both grains for overseas. Domestic farmers are encouraged to plant more in the future. Under this new rule, exchange date showed  that 3.8million tonnes of wheat and 6 million tonnes of corn would be purchased in2012/13, way up from 1.2million tonnes of wheat and 2.1million tonnes of corn at this point in last year. However, this season’s single quota was announced after the farmers already started planting wheat. Therefore, the exchange expects Argentine wheat production to fall sharply this season. 2012/13 wheat production will be 10.12million tonnes, dropped by 28percent from 14million tonnes produced last year. Ricardo Marra, resident of Buenos Aires Grains Exchange, said that growers would have planted more wheat if the wheat export quota was announced two months earlier, with the high prices. Fortunately, the announcement of the quota for corn came in time to encourage farmers to plant more. The area seeded with corn is still 12% less than last year, but 8% more than the original plan before corn export quota was announced. With the quota, a month later 15 million of 2012/13 corn would be available for exports . Therefore, I expect that wheat future price will rise continuously and corn future price will drop after increase due to the bound effect the following week. I would like to get short position in corn and long position in wheat.

http://www.brecorder.com/markets/commodities/america/85668-new-argentine-corn-wheat-rules-help-farmer-sales-.html

http://www.brecorder.com/markets/commodities/america/85660-us-grain-exports-corn-wheat-sales-slump-on-high-prices-.html

This week was really dynamic. The prices of all grains fluctuated so much more than last week. Both corn and wheat price had been quite flat for the first few days and then increased gradually and spiked high as soon as after the USDA released the report on Thursday. USDA reported that corn and wheat production is lower than expected. Both grains price went up tightly together, but dropped so sharply on Friday because of a decrease in export sales. Soybean price also had decreased in early days of the week and then increased dramatically on Thursday and went down tremendously on Friday. My prediction was half right and wrong. I expected a decrease in corn and wheat price and an increase in soybean price. Based on the research, China, main corn importer from US, would import less because of huge corn production along with beginning stocks.  Furthermore, it was predicted that rain forecast for October in US plain  would boost prospects for seeding and harvesting red winter wheat. However, I foresaw that high palm oil price and low canola production shifted oilseeds’ demand to soybean and its price would go up. Unfortunately, I went out soybean market so early because its price was dropped so sharply just after I got 1 short soybean contract. I expected that corn price will decline little bit on the first day of the following week, so I hold that position. Although I did offset 2minutes before the market closed, my short position in wheat is pending. Based on the last price on closing day, my possible gain is $587.50 ($881-$869.25=$11.75/bushel).

(*The order was from last week, which was offset on Saturday, Oct.06 the day after last week’s closing day)

http://commodities.about.com/od/profilesofcommodities/p/corn_futures.htm

This website includes everything about commodity trade. It provides contract specification such as contract size and contract month. It also gives readers tips on trading futures as well as related articles, so this information is really helpful to predict future price and to decide initial position in trading. Furthermore, the website shows major countries of producing grains harvesting and planting time. It would be better to research weather forecasts and global news based on the harvesting and planning time. Then, we can more easily figure out when and what position we have to choose in trading corn, wheat and soybeans.

http://futures.tradingcharts.com/

Like CME Group, this website provides commodity future price quotes, exclusive grains market commentary and related news. Daily commodity price chart shown on the website is useful to observe price fluctuation and understand each grain’s price pattern. There is also contract specification such as daily limit, trading hour and volume.

http://www.agriculture.com/

This website is the most interesting source I found this week. It shows agriculture weather maps and forecasts for farmers as well as weekly moisture index and palmer drought index. As weather is really important for seeding and harvesting grains, we can predict seeding and harvesting amounts and future price. Furthermore, the website provides market analysis. The analysis shows what is going on now and what will happen in the global market.

*Notice: 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. So, USDA will be the most important source for the following week.

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.brecorder.com/markets/commodities/america/82906-us-will-have-enough-corn-despite-drought-usdas-vilsack-.html

http://www.spectrumcommodities.com/education/commodity/statistics/wheat.html

http://www.brecorder.com/markets/commodities/asia/83792-soy-rises-for-3rd-day-on-canola-damage-wheat-corn-firm-.html

http://www.brecorder.com/markets/commodities/europe/84021-palm-oil-follows-cbot-up-on-small-canola-crop-.html

Based on my research, I was so sure that both corn and wheat future prices would definitely go up this week. Although corn already hit limit up price last week’s Friday, I expected that corn price would decline little bit for a few days and then increase again at a slow pace. Rally in wheat future was predicted to be remained for longer period. Euro depreciation, caused by Eurozone crisis, had elevated dollar. Furthermore, USDA released the report last Friday, September 28, that wheat and corn stockpiles are lower than expected; corn stocks are 11% less and wheat stocks are 7% less than expected. Drought in US, Australia and Russia cut corn and wheat production heavily. Nevertheless, the demand of these two grains from livestock farmers, ethanol plant and food makers remain high. These combinations were perfect to predict that corn and wheat price would go up and decide to stay in long position in both grain markets. However, this year’s record large corn crop production and stocks from last harvest reduced corn import demand. This decline in corn imports by China negatively affected corn price. Recent rainfall has boosted prospects for seeding red winter wheat croup the 2013US plains. Sluggish corn market also dropped wheat future price.

Reading articles have been a really good source for me to do trading game. I have found useful websites which provide articles about agricultural commodities.

1)      Business Recorder

http://www.brecorder.com/

This Business Recorder website is Pakistan’s premier Financial Daily. It provides all global business and economy news as well as information about exchange rates. Under the category of “Markets”, there is news about all different kinds of commodities including corn, wheat and soybean by countries. With this collective information, this website is useful to read global economic trend and to predict how national grain market will be affected by this trend.

2)      Reuters

http://www.reuters.com/

Reuters is another website that provides global business news.  Like Business Recorder site, we can learn what is happening right now in the word and anticipate how world grain market will be affected by the current economic trend. Then we can predict when and how the price of corn, wheat, and soybean will change.

3)      USDA

http://www.usda.gov/wps/portal/usda/usdahome

I already mentioned this website last week, but I really like to recommend you guys to use it frequently. On last Friday, there was a huge change in corn and wheat price as soon as after USDA released the report that the stockpiles of wheat and corn are lower than expected. This is why USDA report is really powerful.

As Eurozone crisis is expected to keep going for long period, more investors are likely to exchange Euro to dollars. In response to this increasing demand, US dollar has been sharply increasing, whereupon the price of any commodities, including grains, denominated in US dollar is going up. Furthermore, low stockpiles of corn and wheat push up the price. According to USDA report on Friday, September 28, wheat and corn stockpiles are lower than expected while soybean inventories are higher; corn stocks are 11% less and wheat stocks are 7% less than expected.  Drought in US, Australia and Russia cut corn and wheat production heavily. Nevertheless, the demand of these two grains from livestock farmers, ethanol plant and food makers remain high. Wheat consumption went up by 27% for this summer compared to the last year while corn consumption decreased because of high price. Wheat and corns are highly correlated and wheat supplies are relatively larger and cheaper to corn. As Corn price hit daily limit up price on last Friday, I foresee that more demands will be shifted from corn to wheat. Russia, key global wheat exporter, also announced that there will be no limit on wheat exports until the end of this year. It will attract more demand, causing wheat price increase. So, I am going to stay in wheat future market this week again!

http://capitalismmagazine.com/2012/01/why-is-the-u-s-dollar-rising- against-the-euro/

http://articles.chicagotribune.com/2012-09-28/business/chi-corn-prices-hit-limit-at-cbot-as-shrinking-us-grain-supply-shocks-market-20120928_1_corn-futures-don-roose-corn-harvest

http://www.timesofoman.com/innercat.aspx?detail=13235

http://www.brecorder.com/agriculture-a-allied/183/1243221/