Lesson from last week: I paid too much attention on the fluctuation of grain futures price, however, I have overlooked the broad environment of grain, such as world news and specialist prediction. In addition, the change of grain price is determined by the seasonal growing of grain, which is an essential factor to be considered in the trading game .
Here is some information about Grain harvest:
(Source:Corns,Wheats,Soybeans)
This Weeks`s World News related to Corn&Wheat&Soybeans:
- Sep 23 Weather Condition
Soybeans, the dry and warm weather in the U.S midwest will last for two weeks, which would lead to the higher yield of soybean. Hence, the soybeans` price was expected to decrease. In turn, the soybean futures will steeply drop in the five straight weeks. In terms of corn and wheat, they would rise in the forecasting period.
- Sep 26 Trade Condition
According to government’s report, wheat was largely exported to China and Brazil. This circumstance pushed the corn’s price forward and brought about two-month high in corn futures marketI. on the contrary, soybean’s price was still declining.
My analysis before deciding to purchase three futures:
- Corn
The Corn is always correlated with other grain. The tendenacy of corn is normal fluctuate responding to the change in the price of soybean and wheat, which is affected the weather and trading circumstance. Therefore, it is an unexpectable period, due to the plenty of factors involved.
- Wheat
At the begining of this period, the tendency of wheat rose gradually and stably. After the U.S government`s decision was made, the price of wheat started to boom because of the large volume of international trade.
- Soybeans
Basing on the world news on Sep 23, I can expect that soybeans will slump to the one-month low. As news expecting, the price of soybean futures dropped sharply to $13.06. The range of soybean started to change in a relatively little amplitude. The price of soybean was under observation till Sep 26 morning,however, there is no harbinger of the remarkable rebound in soybean future market.
Decision Making:
As a result, I decided to purchase 10 corn and 5 wheat future contracts for Dec 13 position on account of Sep 23 News on Bloomberg. I expected to do a short-term investment in corn and wheat futures, in order to realize profit immediately and cover the negative margin from last week. With the help of the deliberate observation over the graph,I predicted it is an excellent opportunity to buy soybean futures due to the price approaching to bottom. Therefore,I chose to buy 10 soybean future for November at $13.15 as a long-term investment. Also, the weather condition afftecting soybeans harvest is difficult to forecast. In addition, soybeans will be harvested at November, which will lead to the lower supply of soybean. Hence, I forsee the soybean future that will boom in the future.
Result from this week`s trade:
- Tradedy side:
Finally, I suffered a loss (-$62.5) in the wheat future when I brought and sold the contract at the same day.
- Comedy side:
However，I received a remarkable profit（$2712.5) from corn futures in a short-term holding period after three days` wait.
Summary:
- I think the the change of future market is alway uncertain, though we did lots of reseach. For example, soybeans suffered a one-month slump before, however, it suddenly reached the peak.
- Short-term investment is riskier than long-term investement. So we should be patient in the short-term investment, as the old saying “Haste always make waster” and “A watched pot never boils”.
- The study on the broad environment regarding grain is helpful for us to gain benefit with higher possibility.
Good luck and look forward to my long-term investment in next week