Last week, I offset all of my contracts with 26,080 of net balance. I am happy for even getting the result because in the previous weeks I was still confused a little bit about the trading game.

This week, however, after taking the lecture of commodity fufures Professor Jim Vercammen demonstrated, I almost understand how futures market functions such as  what the relationship between spot price and future price is, how to use an arbitrage, and how convenience yield works, which are really helpful for my understanding of trading game.

Overall, the market would be still bearish this week. The main reason is that US dollar continues to appreciate, so the imports price from the United States would become more expensive and demand would derease which drive down the expected prices of commodities. However, the information that China would increase the demand from the United State could rise the corn price.

This week I took two bids on Tuesday and Friday respectively…

On 4th Oct., I went short for 3 units soybeans at 1161 and 2 units wheat at 601 respectively.

profits1 =3*50*(1161-1158.2)+2*50*(601-607.4)=-220

For soybeans, besides the appreciation of US dollar, based on technical analysis, the fast moving average is still below the slow moving average, so the soybeans price is still a downward trend. In addition, even though RSI is 17.44 which is obviously oversold, actually, fears dominated the market so that people tend to be irrational at present. Therefore, I keep going short for soybeans.

For wheat, there were two reasons why I went short for wheat. First, a government report showed U.S. supplies of wheat were larger than anticipated, so excess supply would decrease the wheat price. Second, according to the indication of MACD, the fast moving average still crosses below the slow moving average never above the slow one from the very beginning of September, so the wheat market is still bearish.

On 7th Oct., go long for 3 units corn and go short for 2 units soybeans(but not enter to the market)

profits2 =(-3)*50*(603.9-600.0)=-585

Obviously, for corn, the reason why I would remain very bullish on corn is just the large corn demand of China importing from the U.S..

For soybeans, the reason why I went short is the weather conditions. Dry and warm weather was forecast across the Midwest and the Delta regions for several days, which would be likely to help crop development and advance the harvest. Therefore, the expected soybeans price would become lower.

Net balance= previous week net balance + this week profits=26,080+(-220-585)=25,275

Lastly, I will keep bullish on corn in the next week, because the market expects China to buy corn after returning from its annual week-long national holiday on 9th October to take advantage of a steep decline in global corn prices, even though there was a small decrease on corn price.