The prices are quite fluctuating this week…

This week there were two main tasks I planned. The first task is to offset the contracts basing on the predictions of our “demand and global outlook” group, because I want to make my profits and strategies sense and reenter market. The second one is to learn other strategies besides ours such as that of “technical analysis” and “exchange rate” groups, which I am planning to combine those strategies in the following weeks. Finally, I successfully offset my contracts on Wednesday with two bids, but I almost lost almost $10,000 mainly from the wheat board.

Corn

The price of corn is likely to drop because of following the possible fall in the global oil price. Moreover, since in the United States there are specific mandates of an ethanol ratio in gasoline, bearish- Mandates of oil remain, but potential loss of blenders (mixers of gasoline) credit in December, imply that ethanol production will decline. Based on the linkage of Ethanol and the price of corn, corn prices will fall.

Soybeans

Thailand and Indonesia have strong demands for soybeans from US rise by at least 13% to a multi-year high of 3 million metric tons in 2011-12 marketing year. Therefore
the rises of exports of US soybeans to South East Asia predict the soybeans price will increase.

Wheat

As Part of China’s 12th 5 Year Plan, it announced its focus the animal husbandry sector, revealing its desire to be more demand for wheat in this industry, which, to
some extent, will push up the prices of wheat. Even though other groups predict
the wheat price will decrease, I still go long for it to offset that contract this week.

During the previous weeks I got much confusion on trading game. That’s the reason I want to offset my contracts and enter futures market next week with brand-new strategies.

There were two bids this week(in order to offset all of my contracts)

First bid on 27 Sept:             corn(2) at 648.9

Second bid on 28 Sept:       soybeans(-2) at 1269.9          wheat(-3) at 699.9

Previous contracts:               corn(-2)       soybeans(2)       wheat(3)

profit(corn)=(-2)*50*(638.4-648)+(-2)*50*(648-652.2)+2*50*(648.9-652.2)=1050

profit(soybeans)=2*50*(1258-1223.4)+(-2)*50*(1269.9-1223.4)=-1190

profit(wheat)=3*50*(640.6-638.6)+(-3)*50*(699.9-638.6)=-8895

total profits=1050-1190-8895=-9035

net balance=35115(previous week net balance)-9035=26080

Wow, Trading Game is amazing…

It is quite a relief that I have got more understanding about the Trading Game this week. To some degree, I can earn money with my personal strategies, even though I got much loss on corn. As to how to get the success, that is most based on the assists of my mates and the lectures professor Jim demonstrated. I really appreciate for that.

Corn

During this week, Japan, the world’s largest importer, have bought 0.8 million metric tons of feed-grade corn for the shipment of October to December. In additional to importing 15 cargoes of corn (each of 55,000 tons) to South Korea for December-to-January arrival and importing 100,000 metric tons of corn to ONAB (Algeria’s animal feed agency) by the end of October, there are much more excess on the demands of corn. Therefore, I predicted the price of corn would go up, but actually it went inverse.

Soybeans

Even though
Chinese imports have increased, China is still meeting its demands for soybeans from Argentina rather than switching to the US like historical trends. In addition to the European debt crisis indicated that US soybean prices would fall, I thought the price of soybeans would decrease.

Wheat

Egypt, the world’s largest importer of wheat, bought  420,000 MT wheat from Russia. Moreover, Kazakhstan is planning to export over 10 million tons of grain. Also, India is going to lift its export ban. I predicted that US wheat price would go down because demand is being met outside.

These are what I learnt this week and the strategies I used. Hopefully, more money would come to my pocket…

There were two bids this week:

First bid  on 20 Sept:     corn (-2) at 696.3,  soybeans (1) at 1348.1,   wheat (1) at 681.9,

Second bid on 21 Sept:              corn (2) at 686.9

previous week contract is           corn(-2),    soybeans(1),    wheat (2)

Profits(corn)=(-2)*50*(692-690.2)+(-2)*50*(696.3-690.2)+(-4)*50*(690.2-685.6)+2*50*(686.9-685.6)+(-2)*50*(685.6-638.4)=-6300

profit(soybeans)=1*50*(1355.4-1338)+1*50*(1348.1-1338)+2*50*(1338-1258)=9375

profits(wheat)=2*50*(688.2-673)+2*50*(673-674.6)+1*50*(681.9-674.6)+3*50*(674.6-640.6)=6825

total profits=-6300+9375+6825=9900

net balance=25215(previous week net balance)+9900=35115

To be frank, this is my first time to handle Commodity Futures. At the beginning of this week, it was really confused to me, even though I have read all the materials on Vista. However, after doing more researches and sharing information with others, it seems to be going better.

From being totally confused to understanding how to earn and calculate the profits, I am starting to be interested in this game, although there are still more challenges I will have to face in the following weeks.

Based on the blogs five expert groups posted and researches I did, I utilized the following basic strategies on corn, soybeans and wheat futures respectively.

Corn

With the hot and dry summer in the US Mideast, it will lead to a decrease in corn yield which will result in global supply to decline. Furthermore, according to the global standard for corn, U.S corn stocks-to-use ratio is going down from 5.4% to 5.3%
last month which will lead to a strong price increase. Considering two points
above, I predicted that corn price would go up.

Soybeans

USDA
reported a cancellation on Friday of 240,000 tonnes in 2011/12 marketing year
US soybean sales to China on 9^th Sep. Furthermore, because of plenty rainfall in US, the production of soybeans will experience a considerable increase in the U.S (the world’s largest exporter of the grains). With such larger supplies, soybean prices will be definitely expecting a downward trend.

Wheat

Chinese feed mills are expected to consume 17 million metric tons of wheat to produce animal feeds compare with around 12.5 million tons last year, as wheat prices become more attractive compared to corn. In addition, demand for wheat as animal feed will continue to rise if corn prices still remain high, since they are highly substitution of consumption. Based on considerable consumption of wheat, I predicted that there would be a downward trend on wheat price.

At last, from my points of view, those strategies are pretty easy to understand, since I have not been so insightful for this game. However, based on the strategies I used, I made some profits in total.  Hopefully, I could be able to figure it out much better next week…

First bid on 15, Sept:

long for corn (-2) at 719.7

short for soybeans (1) at 1385.7

short for wheat (2) at 702.9

The profits of this week:

Corn: (-2)*50*(719.7-692)=-2770,     Soybeans: 1*50*(1385.7-1355.4)=1515,

Wheat: 2*50*(702.9-688.2)=1470

profits=-2770+1515+1470=215  Net balance=215+25000=25215