Oil price is expected to be higher. New Jersey and Pennsylvania refiners get in trouble to operate it properly because Hurricane Sandy is moving toward Northeaster U.S(1). Thus the disturbance of supplying crude oil could underpin the increasing crude oil price, and it causes the grain price will go up. Also Euro is stronger than US currency. The exchange rate is 1.2884 on Friday, lowest since October 11(2). And Yuan is also appreciated. China’s central bank reports that it sets its daily midpoint at 6.3010 versus the dollar, the strongest midpoint level since June 20(3). The depreciated US currency would like to attract more consumers in the world. Thus increasing demand in US is expected.
For wheat, I expect that wheat price is increasing. It is because the estimated supplying wheat does not satisfy the expected amount. Russia faces on harvest time, but it is lower than expected. Russia has harvested 39.6 million tonnes of wheat by Oct. 23. Agriculture Ministry data shows that the amount is 32.5 per cent less than a previous year. As well, the drought weather in US Plains would affect the world price of wheat. Even though many areas have been improved from light rains over last week, the main region for agriculture has not been recovered from drought. Also Ukraine’s agriculture minister announced the country would ban wheat exports from November 15. I expect hopefully wheat is increasing
For soybean, I expect the price is increasing. I focus on the weather forecasts in South America. US expects that good harvest for soybean due to drier weather beginning this weekend, but US supplies is too small to affect world price. The big producers of soybean in Argentina and Brazil are expected to have good harvest: the drier weather in Argentina and wetter in Brazil. However, in order to get commodity there is time lag to cultivate and bring it to market, I think current supply of soybean would not provide sufficient soybean to consumers. Thus I think price would increase.
(1) http://www.reuters.com/article/2012/10/25/markets-commodities-idUSL1E8LPI9M20121025
(2)http://www.reuters.com/article/2012/10/26/us-markets-china-yuan-idUSBRE89P05E20121026
(3)http://www.forexpros.com/news/forex-news/forex—eur-usd-weekly-outlook:-october-29—november-2-239995
(5)http://www.albertafarmexpress.ca/news/cbot-wheat-corn-end-lower-soy-higher/1001799830/
Hi Elly!
I enjoyed reading your blog!
I am not going to take any position in soybean, but I think we are on the same page for wheat! As you already pointed out, lower supplies from other exporters will cause wheat futures to be higher. I found that Argentine, Russia and Ukraine cut production due to poor harvest and export ban. So, I anticipated that more demands will be shifted to US wheat.
I think you are really ready to get into market the following week!
And really good to know about oil price and exchange rate!
Good luck on your trading!
Have a good night and see you on monday!!
Cindy Bae
Good luck on your following week’s trading!
Thank you for writing on my blog Cindy! you comment so fast after I updating my blog^^
For soybean it is my first time to write on my blog. I look at current harvest news. future harvest seems bright, but i think the weather has been chagned so frequently, i expect the price will not be easily decreaing. Since soybean price is very fluctuated, I try one contract.
I am happy to hear we are on the same page for wheat.
Hopefully this week our expectation is correct, so we could gain profits^^
See you tomorrow!
Nice work, Elly!
Opposite to Cindy,I plan to invest big money on soybeans next week,also corn,off course,while I’m not going to touch wheat for some reasons.
I really learned two important things from your blog: crude oil and exchange rate analyisis. I know these two factors would affect the commodity prices,but I never searched for any information about crude and exchange rate. After read your blog,I really think about taking these two factors into consideration from now on.
Also,It’s glad to see that we have the same strategy for soybeans. I thought soybeans will jump,the same with corn. But what made you think “US supply is too small to affect world price”? I remember the US is the largest soybeans exporter in the world, thus the influence of any change in its export supply is likely to trigger around the world.
Once again,Elly, enjoy reading your blog~Hope you make a great deal next week!
Mike
Hi Mike I saw your comment now~
thank you for commenting on my blog^_^
and I am glad to hear that you learn something from my analysis.
For your queation when I red article, soybean market price seemed to depending on the the harvest from Argentina and Brazil. What I meant for small effect from US soybean is that it is becuase major region for agriculture in U.S. suffer from severe drought. This causes the amount of good harvest was not enough to meet demand.
Last week was my first week to have soybean contract.
I think I need to read more news to support my reasons~
and I hope it makes sense to you.
See you in class~
Good to see you’re applying what you’ve learned from the class! Very good!
thank you^_^