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/

As I mentioned on last week’s blog, I took the long position in 2013 March wheat for this week’s trading. I predicted that wheat price would increase during that non-harvesting period because Russia, one of the main exporters of wheat, has been suffering from drought. The president of the Russian Grain Union announced that only half amount of the last year’s export, which is about18-20 million tons, would be exported. Severe dry weather lowers wheat production in Russia as well as in USA. It was also predicted that wheat harvest outputs would shrink in Australia. This week’s trading did go well as I expected it to be; I gained $1550. Honestly, I was going to do offset earlier because wheat price had decreased for first several days of this week. Wheat future price fell due to forecast for rain that will boost the winter wheat production. But, wheat price dramatically went up as soon as after USDA released the report that stockpiles of corn and wheat will shrink due to drought. Therefore, I did offset my long wheat position on Friday, the day the report was released, and trading was successfully done with large gains.

I have got few useful websites for the trading game.

http://www.cmegroup.com/trading/agricultural/

The first one is the CME group. This website shows all the prices of traded commodities as well as agricultural products. The CME group updates the price more frequently than the trade sim does, the website we do trade. CME also provides a change between the settlement price and the previous price. Price and trade volume charts are shown graphically, so, it is easier to understand what is going on.

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

USDA provides collective links of current agricultural news and research, climate change, and national grain reports. There are tons of reports on the website, but the report on the national grain market summery is useful for checking the flow of grain market day by day. Using this summary will be helpful to read trends in national grain markets and predict whether the grain price will go up or down.

http://www.apk-inform.com/en/news

This website includes current agricultural news and harvest and export reports of Ukraine, Russia, Kazakhstan. The news posted on the website shows what is happening and how this can impact on these countries to trade.  The report from the website also shows changes in harvested and exported amounts.  Ukraine, Russia, Kazakhstan are large exporters of wheat. So, if you are interested in Wheat trade, this website will be useful and helpful in predicting the future prices of wheat and guides you to choose good initial positions.

For the following week, I am planning to use weather as a main reference to choose my initial position in the trading game. Weather is one of the most critical factors that affect the world price of the crops. Depending on the weather condition of exporting countries, the amount of crop harvested can be higher or lower than expected. The greater the amounts harvested, the greater number of crops are available in the world market at a cheaper price. Conversely, if less amounts are harvested, a less amount of crops are available in the world market at a higher price. Russia, one of 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.  According to a decrease in harvest, Arkady Zlochevsky, the president of the Russian Grain Union predicted that 18-20 million tons, half amount of last year’s export, will be exported. However, Russia has the new edition of the national program for development of agriculture for 2013-2020 to increase its grain exports. This program with a setting target of 115-million-ton of grain harvest by 2020 will be adopted in next early July. Therefore, I will choose to be in a long position for 2012 December or March wheat because the price will increase during this non-harvesting period.

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.html

This week, the first week of the trading game, it didn’t go as well as I expected it to be. As this week was the first week, I was scared to start the trade commodity and wasn’t sure how to play well. So, I just used basic knowledge of the trade to understand the game strategy first.  I was initially in long position for corn in September, 2013. September is a corn-harvesting period therefore more amounts of corn are available and the price keeps going down during this period. I thought if I bought this crop in September at the cheaper price, I could resell it during winter, a non-harvesting period, at higher price.  Then I could get some margin. However, for the trading game, I should do an offset if I wanted to cancel my initial position. I suppose to change my long position for corn in September, 2013 to short position for the same commodity in the same period. There was no way in reselling this September corn in December. As I held a long (buy) future position, I received a debit in my margin account because the settlement price decreased from the previous day and the market price kept declining.  My misunderstanding of the definition of “offset” was the reason why I got the loss.

Welcome to UBC Blogs. This is your first post. Edit or delete it, then start blogging!