Stockholm is currently one of a few urban areas practicing Congestion pricing. The form of its traffic congestion policy is in a congestion tax, and it has been implemented permanently since August 1, 2007, after a seven month testing period in 2003 from January 3 to July 31. Swedish Transport Agency (STA) claims that the primary goal of this policy is to reduce traffic congestion on major roads and improve the environmental quality in these areas.  The tax revenue collected by this tax would be used on building new roads in Stockholm as well as areas round it.  Drivers are charged with the congestion tax once they enter or exit the Stockholm City Centre, and there are control points at all the main entrances to this area.  The effective time is between 6:30 am and 6:29 pm from Monday to Friday.  The amount of tax paid by each vehicle varies from SEK 10 to SEK 20, based on the time of day, and the detail is list in Table 1. The maximum amount per day for each vehicle is SEK 60. Payments are automatically charged when vehicles pass each of the control points, and the highest possible amount of penalty for late payments is SEK 500.

Table. 1

In general, all Swedish-registered vehicles are required to pay the congestion tax, however, according to STA, there are some vehicles have exemptions from the tax.  They are emergency vehicles, buses having a total weight of at least 14 tonnes, motorbikes and military vehicles.  Owners of disability parking permits are also allowed to apply to the Swedish Tax Agency to exempt from the congestion tax. One thing special about the Stockholm congestion tax is that there are not only vehicle exemptions but also geographic exemptions. The Island Lidingö is the only access to the congestion tax enforced area; therefore, all vehicles from and to Lidingö are granted with exemptions from the congestion tax and provided with 30-minute road passes.

A study done by the Royal Institute of Technology, The Stockholm congestion Charges-lessons after 5 years, shows that in general, after 5 years of implement, the situation of congestion the Stockholm city center has been alleviated, and the attitude of the majority of the local residents is in favour of the policy. The findings of this study reveal that the tax has generated a substantial impact on traffic flow, and drivers have found alternatives as the response to the increasing trip costs. Data provided by this paper presents a declining pattern of the average number of passages during the period between January 2005 and September 2010.  It also points out that the average reduction in traffic volumes in 2011 is 20% while it was 18% in 2008. This proves that the impact of the congestion tax is not temporary and it can be carried on to the future. Around 24% of trips are shifted from cars to public transits, and this indicates that a new driving habit has been slowly developing since 2008.  In term of congestion reduction, Stockholm Congestion Pricing has been largely considered as a successful story.

The same paper also analyzes why the public attitude towards the congestion tax has changed from negative to positive very quickly. The first one it suggests is that some local residents have realized that the benefits of the tax exceeds the cost of it: due to the reduction in traffic congestion, their travelling time on the road is much lower than before; thus they might feel it is acceptable to pay a tax in order to “buy their time back”. Besides, the environmental quality has also been improved since the introduction of the tax. The second determinant is the effectiveness of the congestion tax. Studies show that the effectiveness of a policy is highly positively related with the public acceptability.  Once the public realizes the benefits of the tax and consequences of these benefits; they start understanding the significance of the policy. The Stockholm Congestion tax has sharply reduced the traffic volumes, and it is obvious to local residents. This is probability the main reason why the attitude of the Stockholm public has changed very much in less than 5 years.

However, the Stockholm congestion tax scheme also has its downsides.  As pointed out by International Transport Forum, two main aspects of this tax have been criticized the most: first, the control points are installed at asymmetric places; vehicles from Essingeleden to the south potentially can pass two separate control points. Therefore, it is highly possible that they will charge twice. The other one is the automatic number plate recognition. Number plates in both Sweden and Lithuania have three letters and three digits, and the system fails to distinguish them. Despite of these two technical problems, the successful results are not deniable, and technological innovation should be able to correct these two minor issues. Nevertheless, the case of Stockholm Congestion tax is consistent with the implication of the Fundamental Law of Road Congestion suggested by Anthony Downs. This is another piece of evidence that the supply-side solutions, such as road constructions, would not fix the problem of traffic congestion. Road users fail to take the negative externalities they produce into consideration, therefore, without appropriate government intervention, an efficient outcome is not happening.

Reference:

Borjesson,M.,Eliasson,J.,Hugosson,M and Rundell-Freij,K. 2012. The Stockholm congestion charges-five years on Effects, acceptatbility and lesions learnt. Transport Policy, 20,

pp.1-12

Other resource

International Transport Forum

www.internationaltransportforum.org

Swedish Transport Agency

http://www.transportstyrelsen.se/en/road/Congestion-tax/Congestion-tax-in-stockholm/

The fisher sector of China has expanded fast since late 1970, and as the third largest country in the world, China’s fishing catching policy generates impacts both on its national economy and the global economy.  According to Food and Agriculture organization of the United Nation (FAO), China’s fishery output was ranked number one in the world from 1990 to 1996, contributing approximately 25% of the global output.  For the past two decades, the fisheries sector of China has been its fastest growing sub-sector, and the average annual growth rate is around 10% each year. Aiming to protect fisheries resources and to seek a sustainable development of the fisheries economy, the Fisheries Management Bureau of China (FMB) proposed a new policy named “Zero Growth of capture fishing” and started a new program to accomplish it in 1999.  The Zero Growth Policy has been implemented at all levels of governments in each coastal province, and appropriate measures have been taken based on local conditions.  The purpose of this policy is to control the catch industry as well as to let the local official aware that in term of the performance of fisheries, qualitative changes are more important than quantitative changes. The ultimate goal chosen by the government of China is to make the capture fisheries become zero growth.  In order to achieve this goal, the FMB imposes regulations on the number of fishing vessels by enhancing the distribution of fishing licenses (the fishing license system has already been established since 1980), and fishing is not allowed in major inland fishing area and coastal marines during closed seasons.

However, it seems that the Zero Growth policy did not work well in 1999, and the based on the data provided by FAO, although the rate of growth in marine capture sherry decreased from 8% to 0.006%, the goal of zero growth was not met. Thus, five new regulations were designed based on the new fishery structure adjustment guideline issued by the Ministry of Agriculture of PRC (MOA) to reduce fishing efforts:   no more permissions on building new vessels; clearing up all illegal boats; non-fishery labour not allowed to participate in the fishery sector; no fishing for foreign boats and establishment of vessel retirement systems. Apparently , the new adjustments worked towards the object of the Zero Growth policy, and it was reported by FMB that in 2000, the growth rate of marine capture fishery declined to negative 1.4%, and the inland capture fishery also experienced a growth rate of -2.3%.  Compared with the situation in the mid-1980, where capture fish production accounted for about 55% of the total production, in 2000, 60% of the total production was culture fish production and capture fish took approximately 40%.

The population of China accounts around 1/5 of the world population, and employment has always been its top priority. The fishery sector contributes not only to China’s economy but also to its employment. Based on the data from the National Oceanographic Data Centre (NOAA), in 1996, there were around 12.08 million of people in China participated in fisheries production, and almost 9 million new jobs were opened after 1979. It is estimated that the lives of around one fifth Chinese have been heavily relied on fishery production, both directly and indirectly.  Before the Zero Growth policy was issued, many worried that it would impact the national economy negatively. However, the official statistics provide us with positive evidences. In 1996, the per capita income of fishery population, on average, was $3826 RMB (approximately equivalent to $500 US dollars) while average income of rural population was only 1926 RMB (around $250 US dollars).  In 2000, the number of people directly employed in the fisheries sector was 13.1 million, and in total around 20.4 of people were associated with the industry at different degrees.  The export earnings generated by the fisheries sector in 2000 was $4.7 billion US dollars.  MOA points out that in 2002, the per capital income of fishermen increased to $8667 US dollars, and this value is more than 15 times of it in 1996. One reason behind this improvement in incomes is shifting the centre of fishery productions from capture fish to culture fish. FOA states out that the culture fish production had been continuously increasing since 1970. In 1990, 51% of the total fish production in China was contributed by culture fish productions, and this number rose to 60% in 2000.  This indicates that some fishermen who might be affected by the Zero Growth policy were able to relocate themselves in the culture fish industry. The Zero Growth policy might have worked in the way as the government of China initially claimed in 1999.

The FAO has always been questioning the data produced by the MOA, believing that local governments in China have been over-reporting their productions. The Zero Growth policy is often considered as the last response from China to FAO’s doubts. However, numbers described the consequences of this policy are largely produced by China’s authorizes; therefore, FOA still holds the creditability questionable.  While the government of China has concluded the Zero Growth policy as successful, several institutions still think that the fish stock of china has been continuously declining. Nevertheless, we cannot the effort that China has put on seeking solution for sustainable development in the fisheries sector, and the Zero Growth Policy is just the first action taken by the Chinese government.  So for, it is less than 15 years since the policy has been implemented, and the time phrase is not long enough for observing results in the long run. Further researches may be needed for deeper investigations on looking for more significant information. Making conclusion about the impact of this policy now could be misleading to readers.

Reference:

Food and Agriculture organization of the United Nation, Reports on China’s Fisheries sector, FOA,2013

Li, Luping and Jikun Huang, China’s accession to the WTO and its implications for the fishery and aquaculture sector, center for Chinese Agricultural Policy, 2003

National Oceanographic Data Center, Importance of the Fishery Industry in China, NOAA, 1996

R.Wastom, L.Pang and D. Pauly, The Marine Fisheries of China Development and Reported Catches, Fisheries Centre, University of British Columbia,2001

Other resources:

Ministry of Agriculture of PRC

www.english.agri.gov.cn

As one of the only two provinces in Canada that have existing carbon taxes( the other one is Québec), British Columbia has been famous for its beautiful natural environment and consistently high gasoline price.  According to the GasBuddy.com, the average gas price in the great Vancouver area for this week is about $1.37 per liter while the average price in Toronto is only about $1.27 per liter. Some people in British Columbia think that they involuntarily pay a relatively higher price and blame this on the Carbon Tax implemented by the BC government since 2008.  The B.C government has been continuously claiming that the practice of the carbon tax has benefited not only the environment of B.C, helping reducing the greenhouse emission, but also the BC residents via tax reductions, which are guaranteed by the tax revenue generated by carbon taxes. However, the evaluation of the whole program is mixed.

Based on the information provided by the recently updated Carbon Tax Review released by the BC Ministry of Finance earlier this year, the carbon tax, which is first introduced on July 1, 2008, is charged on every tonne of greenhouse gas emission (GHG) emitted. The original purpose of the carbon tax is to create incentive for BC households and firms to reduce their amount of fossil fuel consumption. Generally, this is no exceptions for any industries in British Columbia, as long as there is a need of purchasing fuel.  Another aim for this policy, stated by the B.C government, is to make lean energy relatively more attractive than fossil fuel. When the tax was initially imposed, the rate was considerably low, and it gradually increased over time. In July 2011, the tax rates was $25 per tonne of GHG, and the last time the tax rates were adjusted is July 2012. Since then, the rate has been $30 per tonne.  The B.C government makes it very clearly that the Carbon Tax is not designed in a way to meet the emission-reduction targets solely. Rather, they consider it as an important strategy and a complement of other emission-managing systems. The B.C government uses a data from a reported published by an independent consulting company, MK Jaccard and Associates, to demonstrate the potential of this policy: “in absence of all other GHG reduction strategies, the carbon tax alone could cause a reduction in B.C’s emissions in 2020 by up to three million tonnes of CO2 equivalent annually”.  Since the beginning of implementing the Carbon Tax, the B.C government has promised that it would be “revenue neutral”.  This means that all the tax revenue generated by the carbon taxes will be distributed back to B.C families via tax reduction programs, such as income tax credits and cutting some income tax rates. In the Carbon Tax Review, it states that the B.C government has returned $500 million more than what they have collected via the Carbon Tax to the public.

It has been more five years since the Carbon Tax has presented, and whether it has worked as well as suggested by the B.C government still remains datable. In August, 2013, an Ottawa-based think-tank, Sustainable Prosperity, issued a report, BC’s CARBON TAX SHIF AFTER FIVE YEARS; RESULT,   and concluded that the B.C carbon tax policy has produced a remarkable reduction in both fuel consumptions and emissions of greenhouse gases.  The report states that from 2008 to 2011, compared to other provinces/regions, the per capita consumption of fuels in BC has decreased approximately 19%, and this is largely due to the fact that the carbon taxes include almost 77% of the GHG emissions in BC.  The report also shows there has been any negative effected generated by the Carbon Tax on BC’s economy and the overall taxation has not changed much. For the year of 2011, GDP per captia of BC was increased by 1.92% while it was 1.38% for the rest of Canada.  However, some believe that the success in reducing   GHG emissions is actually on the cost of economic loss, and the policy may not very cost-effective. In 2013, the Vancouver Sun also hired a B.C local consulting firm to conduce a survey on similar topics. The results of this survey seem providing some evidence for the claim that the Carbon Tax has hurt the BC economy: around 5% of the gasoline retail price comes from the Carbon Tax in the great Vancouver area, and prices of other types of transportations fuels such as disables have been increased partly due to the implement of the Carbon Tax. Many business owners failed to contract their consumption on fossil fuels because they hardly found any relatively cheaper substitutes. Some of them even revealed that they would like to operate their business and make investments in places with lower emerge taxes. The Vancouver sun uses these results as evidences that the B.C government may need to rethink about the program. In the Carbon Tax review, the B.C government also points out that the Carbon Tax is a tool of redistributing income among BC residents: using the tax revenue to assistant the low income families, especially those in the northern and rural areas.  However, a 2011 report prepared by Canadian centre for Policy Alternatives(CCPA), Fair and Effective of Carbon Pricing, shows that the Carbon Tax has not performance well in term of distributional effects, and it claims that “Even after tax cuts and credits are figured in, the carbon tax has a disproportion­ate impact on low-income British Columbians, and most benefits the highest-income households that are also the biggest emitters”: about 54% of the tax revenue went to cooperate income tax cuts; low income credits in fact had decreased from 33% in 2008 to 19% in 2011; the poorest 10% households in BC spent around 1.3% of their incomes on carbon taxes while the richest 10% only used 0.3% of their incomes on carbon taxes.

The BC Carbon Tax policy has only been introduced to the public for less than six years, and complete evidence about its influence on the economy of BC has not been available. Therefore, it would too early and very incautious to make any conclusion or judgments on it. However, the Carbon Tax enables British Columbia holding a leading position of Climate Changes in the North American region.

References:

Finlayson, Jock. “B.C.’s carbon tax hurting businesses.” Vancouver Sun. Vacouver Sun, 1 Aug 2013. Web. 9 Mar 2014. <http://www.vancouversun.com/business/2035/carbon hurting businesses/8739247/story.html

Lee, Marc. “Fair and Effective Carbon Pricing .” CCPA. CCPA, n.d. Web. 9 Mar 2014. <https://www.policyalternatives.ca/…/CCPA-BC_Fair_Effective_Carbon_F>.

STEWART, ELGIE , and Jessica MCCLAY. “BC’S CARBON TAX SHIFT AFTER FIVE YEARS: RESULTS.” sustainable prosperity. sustainable prosperity, n.d. Web. 9 Mar 2014. <www.sustainableprosperity.ca/dl1026&display>.

Lee, Marc. “Fair and Effective Carbon Pricing .” CCPA. CCPA, n.d. Web. 9 Mar 2014. <https://www.policyalternatives.ca/…/CCPA-BC_Fair_Effective_Carbon_F>.

As I forecasted last week, soybeans and corn rose sharply this week. My open positions approached to breakeven.

Soybeans: Paid price 13.1475 VS Last Price this week 13.0925

Corn:Paid price 4.5325 VS Last Price this week 4.405

Soybeans and Corn had been declined continuously after a huge slump at the beginning of October. My lack of knowledge and risk-loving in the futures market resulted in a tremendous returns immediately. As a risk-lover in the beginning of trading game, I insist my own belief ” buy large amount of futures at low price  and sell high price on the basis of my forecast in a short time” in order to pursue a quick returns. After suffering a huge loss, I thought sustainable investment ( Hedging has the smallest risk) is a better method to survive in the competitive futures market

Decision and Prospective  Analysis:

Corn:

Soybeans:

I did not do any transaction  this week because of upward trend in soybeans as I expected last week. It is a good opportunity for me to remain the quantities of soybeans so that I achieve breakeven immediately in the near future. According to Bloomberg news, soybeans and corn will rise persistently on account of improving demand for both futures. This news was a sign to tell me that soybeans and corn may reach to peak in the next week. The harvest of soybeans and corn will be end at Nov. This another sign tell me that those futures will approach to zenith before next harvest season. Therefore, waiting for zenith is only way for me now.

News about Soybeans and Corn:

Soybean, Corn Futures Rise on Improving Demand; Wheat Advances

Portolio Summary from positive to negative:

I enjoyed a 2.25% returns on Sep 27. I think I am a good trader in the trading game. However, I suffered -39.75% returns unpredictably on Oct 1st after unanticipated news posted. I suddenly suffered a trap which induce me hardly to adjust my negative returns situation. Then I continued to encounter -42.04%  returns on Oct 10. I have suffered -22.07% returns on my last week`s portfoilo. This week`s portfoilo begun to rebound slowly (-14.43%). It is a connotation that my portfoilo will achieve breakeven soon becasue of 7.64% increase .

Lessons from this week:

According to “The Art of War” , it said that enemy does not move and I do not move. I think this ancient maxim can be used in the futures market. The fluctuation of futures represents the enemy of speculators which enable us to lose or gain money. If  fluctuation of futures do not change enormously, the method for traders is on standby. When fluctuation of futures, it is a good chance for different traders to gain or loss.

Happy Halloween~

Last week, the tendency of soybeans did not change drastically. My position was still sustained a huge loss in my trading game. The negative returns (red colour number) had lasted for three weeks. Patience is important for me to confront current situtation becuase soybeans will reach peak in the following weeks theoretically.

Decision and Analysis:

As a speculator, I always expected price of soybeans to be rapidly gone up  after taking a long position in order to achieve margin. However,The the unanticipated and weather news enable soybeans to deviate from my predict. For weather news, cold and wet weather in central areas of the U.S resulted in the rise of soybean futures. Basing on the weather news, I can expect that soybeans will increase immediately . As news expecting, the price of soybean futures increased sharply from  $12.66 to $13.00.  The  price of soybean was under observation till Oct 17 morning,however, there is no forebode of slump in soybean futures market.As a result, I decided to purchase 1 soybean futures contract for Nov 13 position. The soybeans fallen back to $12.91 immediately after unanticipated news posted . The news showed that china would import the more soybeans from U.S.  Therefore, I made a small loss immediately from soybean futures because of slow decision-making. I could not take lots of actions after I purchased too many soybean futures contracts. I expected soybeans to have an increasing trend with good unanticipated news next week so that I can survive from my big loss.

Soybeans News Link:

Weather News:http://www.bloomberg.com/news/2013-10-16/corn-swings-as-investors-weigh-drier-outlook-for-midwest-crops.html

Unanticipated News:http://www.bloomberg.com/news/2013-10-17/corn-swings-on-u-s-harvest-outlook-as-rain-aids-south-america.html

Portfoilo Summary:

I have suffered -42.24% returns on my last week`s portfoilo. This week`s portfoilo begun to rebound slowly (-19.24%). It is a connotation that my portfoilo will achieve breakeven soon becasue of 23% increase .

Lessons from this week:

1. The the unanticipated news have deeply influence on futures than weather news, so we should make a decision on futures immediately.
2. Short hedging is a good method to get out of risk if you are risk-netural trader.
3. “ Do not be penning-wise and pound foolish” .This idiom reveals that purchasing too many contracts at a time is a terrible action becuase trader is difficult to adjust next strategies flexibly.

Good luck and look forward to my long-term investment in next week.

My portfolio`s open positions :

Last Week:

VS

This Week:

I compared last week`s  with this week`s position. I found that Corn and soybeans slumped continuously. My portofilo`s return is negative. My loss has been exceeded 40000 dollars.

New Knowledge from FRE 501 Class about Futures Market:

Basis：

The definition of basis is equal to the cash price minus the futures price. In the trading game, I can find some data about basis for different month futures contracts to predict prospective trend of futures. It is better for me to choose a potential futures which will rise.

My perspective analysis about Soybeans and Corns:

Soybeans:

With excess supply of soybeans from huge harvest, soybeans continued to stay bottom. It approached to hit 19-month low. I think this is an opportunity to short and cover soybeans futures as a short-term investment. Nevertheless, upcoming rain weather which will slow harvest would have a chance to save downturn of soybeans. Soybeans start to be dramatically rebounded on Oct 8. With rainy season continuosly, I predicted that soybeans will boom in the future. Furthermore,the harvest of soybeans will be ended at November according to seasonal reason. The difference between supply and demand of soybeans will cause shortage(Supply>Demand).  This condition will push soybeans to be jumped sharply in the November.Therefore, I would not do any transaction on soybeans now in order to pursue high returns in the future.

News Link about Soybeans: Soybeans Futures

Corns:

The tendency of corn was almost the same as soybeans, but corn slid to three-year low. So corn decreased continuously in whole week. The harvest of corn will also ended at Nov. I felt that corn to ascended in the  November because of shortage of corn.  So I did not sell the corn immediately to reduce my loss immediately. I decided to do a long-term investment on corn.

News Link about Corn:Corn Futures

Tendency of my portfoilo:

There is little increase  from Oct 1 to Oct 4 in my portfoilo.  However, my portfoilo has approached to hit 1-month bottom again.  I expected my portfoilo to be beakeven in the future.

What I learned from this week: 

1. Pursuing high returns always bring high risk.
2. New knowledge about future market is necessary. It can help you to make a proper decision to achieve the profit.
3. Pay more attention in the long-term investment.

Good luck and look forward to my long-term investment in next week.

Bitter Experience from this week`s Trade:

The beginning of this week:

Soybeans and corn futures had expectant trend through last week. Corn and Soybeans had a fluctuation with a narrow range (small increase and decrease during this period). As I mentioned last week, wheat had a prospective analysis on trend which means that wheat would rise sharply this week because of large export from US to other countries. So I made a decision (purchased 10 wheat contracts) on Sep 30 in order to gain the quick returns. The result from this short-term investment was gratifying ( I gained 2250 margins).

Tremendous Change in the mid-week:

After gained profit from wheat transaction,I planned to proceed with several of short-term investment in wheat and corn. In addition, I expected my long-term investment in soybean to steadily rise at  October . When I woke up on Oct 1, soybeans and corn`s positions turned into red which means that I suffered a huge loss. However, I still looked forward to the growth of soybeans. Because I encountered the same situtaion about soybeans and corn suddenly slump one day), then soybeans and corn rapidly increased. Finally, I sold them immediately and gained roughly $2500 profit from this trade. Sp I thought I should pay more patience on the change of my futures.Unexpectedly, those futures slumped continuously in the following day. I knew the reason why slump in soybeans(Too many Inventories reason) and corn(big harvest reason).My purchasing power became negative so I could not reduce my loss throught trade.

Prospective Analysis about Corn and Soybeans:

Soybeans:

With excess supply of soybeans from huge harvest, soybeans continued to stay bottom. It approached to hit 19-month low. I think this is an opportunity to short and cover soybeans futures as a short-term investment. Nevertheless, upcoming rain weather which will slow harvest would have a chance to save downturn of soybeans. Soybeans start to be dramatically rebounded on Oct 3. With rainy season continuosly, I predicted that soybeans will boom in the future. Furthermore,the harvest of soybeans will be ended at November according to seasonal reason. The difference between supply and demand of soybeans will cause shortage(supply>Demand).  This condition will push soybeans to jump sharply.Therefore, I would not do any transaction on soybeans in order to wait for high returns in the foreseeing.

Corn:

The tendency of corn was almost the same as soybeans, but corn slid to three-year low. So corn decreased continuously in whole week. The harvest of corn will also ended at Nov. I felt that corn to rise in the next week because of low supply. So I did not sell the corn immediately  to reduce my loss immediately. I decided to do a long-term investment on corn.

Trendency of my portfoilo:

There is slump from Sep to Oct in my portfoilo. My portfoilo has hit 1-month bottom. However, the sign of resurgent in my portfoilo is slow. I expected my portfoilo to be beakeven in the future.

What I learned from this week:

1.  I should purchase futures carefully. Do not buy huge amount of futures (greater than 10 contracts) once. Becuase remarkable gain and risk exists simultenously.
2. New knowledge about future market is necessary. I only use the purchase and sell sales. I should learn something about cover and short.
3. Pay more attention to global future market.

Good luck and look forward to my long-term investment in next week.

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:

1.  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.
2. 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”.
3. 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

As a newcomer for the future market, this simulation trading game is a unique instructing method to gain the knowledge of future trading, as well as the trend of future price regarding corn and soybean.

While I have never touched future market before, I had the confidence in making a  positive profit by the fundamental rule: Buy low, sell high. Hence, I made several research on the analysis about the soybean’s and corn’s price,which are made by the reliable financial website.

Here is the chart showing the changing of soybean’s price:

(Derived from Yahoo! Finance, http://finance.yahoo.com/echarts?s=SX13.CBT+Interactive#symbol=sx13.cbt;range=5d;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;)

As the graph showing, on Sep. 19, there was a dramatic decrease of future price from 1360 to 1330 approximately. Therefore, I expected the price to rebound in the following days. Basing on this exception, I chose to take a long position on the soybean future contract and reap the benefit of the rising price. Therefore, I chose to purchase one unit of soybean.

However, on Sep. 20, the price of soybean has no significant increase. I forecast  that there will be a remarkable jump in the future.

In terms of corn,  several articles, from CME Group, state corn market will recap in the foreseeing future.(CME Group http://www.cmegroup.com/education/market-commentary/ag/2013/09/recap-corn_14093.html). Therefore, in order to reap the benefit due to the rising price, I took the long position in corn future contract. Although I suffered a little loss in this week, I still have the confidence in the long-term return.

Hope the future price of corn and soybean will change as expected.

Good luck and look forward to my portfolio performance in next week

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