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 9th 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