Because this was the first week, i had a difficult time reading and analyzing each expert blogs, and it was hard to determine the magnitude of each report. As I am in the productions and crop reports group, my bidding strategy was mainly based on the information I researched on and from the information from the demand group. In the end, the fundamental concept of market price determination is from demand/supply.

I first looked at the information from the USDA crop report on corn and it was forecasted that the supply of corn would decrease in the biggest production country, US Midwest. Immediately, i assumed that there would be a shortage in corn supply, so the prices would go up. Most importantly, the stock-to-use ratio was very low, 5.3%, which was associated with price increase. At first, i was certain that i was going to go long for corn expecting a big rise in prices, but i was looking at the prices over the past few days and i realized that there was a lot of fluctuation in the price which lead to a very inconsistent price trend. I am risk-averse so i preferred not to bid on corn until there was a steadier price trend.

As for Wheat and Soybean, I could say that i was quite sure that the prices of both commodities were going to fall as the economy predicted that there would be large supply in the market. Still, i chose to bid on only one commodity just to be safe, and in my perspective, soybean had a steadier price decline trend than wheat.

So I bid 1 short contract on soybeans. I knew to enter the market, i needed to bid within the Low-High range of the next day, and for a short contract, i should bid just under the high to maximize profit. I looked at the High’s of the past few days and calculated about how much it dropped each day, then i predicted the high of the next day and entered a bid price a couple cents under it.

Aside from reading news and blogs, i realized it was very important to share and discuss with my classmates. One person was more familiar with corn, one person was more familiar with wheat etc, so when we talked to each other, we were able to feed each other info and just fill in the holes in our knowledge.Of course, we confused each other even more at times, but I felt that i learned more from talking to them than from reading on the websites. Great thing was, everyone was not greedy with maximizing own profits and shared their thoughts! haha

Overall, it was a very challenging week as it was my first time learning how to trade in a futures market, and it took me about 1 whole day just to understand how to bid the prices to enter the market. But honestly, there are still many confusions about this game, so hopefully I will learn as I play and become a pro! haha =)

Let’s make some moola! $$

Here is my profit summary of the week.
I only bid on soybean. 1 short contract for sept.14 (at 1391) and another 1 short contract for sept.16 (at 1370).
BUT, my 2nd short soybean didn’t enter the market because my bid price was too high
Closing prices:
sept. 14 – 1382-6
sept.15 – 1358-6
sept.16 – 1355-4
Profit:
sept.14: 1x(1391-1382.6)x50 = 420
margin after clearing = 25,000+420 = 25,420

sept.15: (1382.6-1358.6)x50 = 1200
margin after clearing = 25,420 + 1200 = 26,420

sept.16: contract 1 (1358.6-1355.4)x50 = 160
margin after clearing = 26,420 + 160 = 26,580

(Total profit for the week = 420+1200+160 = 1780)

Caroline Chiu