Daily commute to school or work is very common everywhere around the world. However, commuting can be a pain if commuters have to face daily gridlock. That is what people in Jakarta are facing every day. Jakarta, the capital city of Indonesia, is known as one of the traffic giant in the world along with Bangkok, Nairobi, Manila and Mumbai (Bell, 2010). For the past twenty years, Jakarta has been facing severe traffic problems and it only gets worse with the economic growth. According to Numbeo (2014), 67% of the people living in Jakarta are driving to get to their destination every day. Traffic jams cause increase opportunity cost for every individuals as the time they spend on the road can actually be used for other things. Citizens have demanded the government to address the issue since forever and the government have set some policies to ease the traffic, such as 3-in-1, earlier school time, busway, increase toll rate and increase parking fee yet they all bear no results. So, why do these many policies still have little or no effect towards the traffic flow in Jakarta?

3-in-1 systems is similar to that of the HOV in Vancouver. It literally means that there has to be at least 3 people in 1 car during certain hours, which in Jakarta is set during morning and afternoon rush hours. The 3-in-1 systems are applied on major routes heading to the central business district giving people incentives to carpool with friends or coworkers or use public transport thus reducing the amount of cars on the road. Turns out it does reduce the amount of cars on those routes, but increase the traffic on alternative routes and highway. It also creates an opportunity for the poor people living in the capital city to be a “jockey”. Those people will wait on the pedestrian walk before the 3-in-1 areas and offer a price to the driver to have them sit in his/her car to reach the minimum 3 people rule. The system has proven to fail to reduce the traffic.

Starting in January 2009, during the era of Fauzi Bowo, previous Jakarta’s governor, school time is moved to 6.30 am from the original 7.00 am in order to reduce traffic by 6-14%. This is a very mind boggling policy as also pointed out by Joko Widodo, Jakarta’s current governor. Earlier school time has also proven to be a failure in reducing traffic problems because the roads will only be empty during holiday time as Basuki Tjahja Purnama, Jakarta’s vice governor, stated (Aziza, 2014). This is because there is no school based on area system, meaning, students are usually enrolled in school that is 20-30 km away from home causing them to travel further every day. This is because of the different level of education each school has, that’s why parents are willing to send their kids to school far from home. So, instead of moving the school start time earlier or later, government should focus more on reducing the school distance or having a standardized education.

Increase in toll rate and parking fee policy is aimed to reduce driving by increasing the cost of driving, thus people will be more willing to carpool or take public transport. This policy can be effective if there is another option that people can take besides driving. It has not reduced traffic significantly because people are reluctant to switch due to the inconvenience it causes. Moreover, taking public transport does not guarantee them to be able to reach the destination within the same amount of time or less because they are also stuck in the traffic. Besides that, there is security issue in taking public transport. There have been cases of sexual harassment, rape, pick pocket and others that make people afraid to take buses.

Busway system in Jakarta is expected to be the new beginning of a better public transport system. However, in reality, it only makes traffic worsened. The busway has their own lane in which no other cars, buses, or motorcycles can use. This busway lane took over one lane from the already lack in road capacity Jakarta road has. Another problem is that each of the busway station is located a few blocks away, causing inconvenient for people if their destination is within the station. There is also no specific time schedule for the buses arrival, meaning they can arrive at the station within 5 minutes or 30 minutes, no one knows for sure. On top of that, the public transport system is not integrated with each other, causing another hassle for people to transfer.

From those few policies that the government has tried to implement in order to reduce traffic, nothing seems to work out. This is because the government has failed to address the main issue of the traffic problem in Jakarta and that is the poor infrastructure. No matter how many policies government will try to implement in the future, if they are not trying to even fix the current infrastructure, traffic jam will not be resolved and Jakarta will always be known as a traffic monster in the world.

References

Bell, Alan. 2010. “10 Monster Traffic Jams Around The World.” BBC News Magazine Online. Home page online. Available from http://www.bbc.com/news/magazine-19716687 Internet; accessed 31 March 2014.

Numbeo. 2014. “Traffic in Jakarta, Indonesia.” Numbeo Online. Home page online. Available from http://www.numbeo.com/traffic/city_result.jsp?country=Indonesia&city=Jakarta Internet; accessed 31 March 2014.

Aziza, Kurnia Sari. 2014. “Jokowi Bingung Alasan Jam Masuk Sekolah Terlalu Pagi.” Harian Kompas Online. Home page online. Available from http://megapolitan.kompas.com/read/2014/03/26/2152458/Jokowi.Bingung.Alasan.Jam.Masuk.Sekolah.Terlalu.Pagi Internet; accessed 31 March 2014.

Indonesia, Malaysia, Philippines, Papua New Guinea, Timor Leste and Solomon Islands, which are located in South-east Asia, formed the coral-triangle. Those countries are home of nearly 600 different species of reef-building corals and also more than 2000 species of reef fish. They are considered as a place with the most diverse marine habitats globally (WWF, 2014).

Indonesia, being an archipelagic country, consists of 17,508 islands scattered around the equator. It is a maritime continent with 2.7 million km² of territorial waters and 3.1 million km² of EEZ. Fisheries accounts for 2.4% of Indonesia’s GDP where in 2004, around $1.6 billion worth of fish was exported. Fisheries sector helps to increase export and foreign exchange earnings provide employment opportunities to roughly 6 million people, be a source of income for fishermen and the government and also improve the nutritional standard of the nation (FAO, 2000).

In 2013, O’Malley, Lee-Brooks and Medd published an article outlining the importance conserving Manta Ray due to the fact that it is considered as unsustainable fisheries resources, meaning that Manta Ray will not be able to recover its population number when the amount is depleted. The paper estimated that by turning Manta fisheries into Manta watching tourism, it will generate $73 million and $140 million annually for dive operators and the government respectively. Influenced by the result of this paper, on February 21^st, 2014, Indonesia announced that within the country, Manta Ray will be protected from fishing and export, turning Indonesia as the world’s second largest sanctuary for the species (Mason, 2014).

O’Malley, Lee-Brooks and Medd (2013) stated that a Manta Ray is worth up to $1 million being alive due to its attractiveness to tourists who want to have the chance to swim alongside the gentle beast, however, it is worth only $40 to maximum $500 dead. Total annual income from Manta tourism contributes $15 million to Indonesian economy annually, while the fisheries only resulted $442 thousand (Catalyzing Change, 2014). The problem now is how to enforce the regulation properly as there is a risk of poaching. After the regulation was passed on 27 January, international NGOs and conservational groups are working to spread the word on how valuable a Manta Ray is alive than dead with the assistance of business people, military, water police and local officials. Sudirman Saad claimed that there would be more than 200 special policemen to guard the conservation area, mainly around the key population found in Bali, Flores and Raja Ampat, and enforce the law as well as government encouragement to local fishermen being affected by the ban to take advantage of the tourism (Mason, 2014).

Manta Ray conservation is not the first fishing ban the government announced. In 2007, Susilo Bambang Yudhoyono, Indonesia’s current president asked the leaders of other coral-triangle countries to form a join regional conservation initiative which then was agreed two years later to establish Marine Protected Areas (MPA). This was also supported financially by American and Australian governments as well as many multilateral donors, such as Asian Development Bank. The Indonesia’s MPA covers about 16 million hectares and projected to increase to 20 million (about 10% of its total water) by 2020, covering a wide range of coastal and marine ecosystems. If this does come true, it will be a big achievement in reaching towards the goal of protecting 30% of world’s oceans to prevent the collapse in fisheries. As good as it sounds, the Indonesia’s MPAs are not properly enforced. A study done by World Resources Institute found that out of 170 MPAs, only 3 that are rated as effective in Indonesia. This is caused by flawed designs with too few restrictions on fisheries causing holes in the system itself and the fact that most MPAs are far inland and with the widespread of deforestation of watersheds, it increases the run-off of sediments and nutrients inhibiting coral growth or making them overgrown with algae making them more vulnerable to ocean acidification and coral bleaching (Anonym, 2013).

Manta Ray ban will undeniably increase overall welfare if the local fishermen that originally have their life depend on it are able to find other source of income. The problem is, usually, they don’t have any other options besides fishing Manta Ray and that the fish is also their source of protein. Without government support, it will be difficult to persuade the fishermen to deviate from fishing Manta Ray. Moreover, with the existence of the ban, there will be a shortage in supply and thus with a fixed demand, price is expected to increase creating an incentive for fishermen to poach. Although it was mentioned by Mason (2014) that there will be around 200 special policemen to monitor and enforce the regulation, however, anonym (2013) found that in Alor, which is one of the MPAs in Indonesia, the coastal police force only has two speedboats and one of them is broken.

By implementing Manta Ray fishing ban, Indonesia became the second largest Manta Ray conservation that attracts tourists from around the world. It has now become the top three in the list of Manta Ray tourism spot. Establishing a conservation area will bring huge revenue for not only the people working in the tourism industry, but also the government. However, considering the previous experience of MPAs, the enforcement and thus the benefit of the ban is still in question. How well the fishermen are able to find other source of income and protein is also a problem that needs to be addressed. Hopefully, what the government promised will be fulfilled and thus ensure that everyone is better off. For now, let’s wait and see how well the government manages to design and implement the system.

References

Anonym. 2013. “Plenty More Fish in the Sea?,” The Economist Online. Home page Online. Available from http://www.economist.com/news/asia/21591905-government-tries-preserve-fecund-part-coral-triangle-plenty-more-fish-sea Internet; accessed 21 March 2014.

Catalyzing Change. 2014. “Indonesia Announces World’s Largest Sanctuary for Manta Rays,” Catalyzing Change Online. Home page Online. Available from http://www.catalyzingchange.org/indonesia-announces-worlds-largest-sanctuary-manta-rays/ Internet; accessed 21 March 2014.

Food and Agriculture Organization. 2000. “Information of Fisheries Management in the Republic of Indonesia,” Food and Agriculture Organization of the United Nations Online. Home page online. Available from http://www.fao.org/fi/oldsite/FCP/en/IDN/body.htm Internet; accessed 21 March 2014.

Mason, Margie. 2014. “Indonesia Becomes World’s Largest Sanctuary for Manta Rays,” CTV News Online. Home page online. Available from http://www.ctvnews.ca/sci-tech/indonesia-becomes-world-s-largest-sanctuary-for-manta-rays-1.1697169 Internet; accessed 21 March 2014.

O’Malley, Mary P., Katie Lee-Brooks and Hannah B. Medd. The Global Economic Impact of Manta Ray Watching Tourism. PLoS ONE 8 (2013): e65051.

World Wild Life. 2014. “Coral Triangle,” World Wild Life Online. Home page online. Available from http://worldwildlife.org/places/coral-triangle Internet; accessed 21 March 2014.

Climate change is an imminent danger that everyone is facing. One of the main causes is the green house gas (GHG) emission. According to PEACE (2007), in 2005, Indonesia is in the top 3 of world’s GHG emission excluding EU (by including EU, Indonesia is 4^th). In 2008, Sri Mulyani, Indonesia’s financial minister, commissioned Green Paper written with the help of AusAID and Australian Treasury aiming to reduce emissions by 26% with business as usual up to 41% if there is international support by 2020 (Arup, 2009). In the Copenhagen meeting, current president Susilo Bambang Yudhoyono introduced a proposal of carbon tax for 2014 that will impose IDR 80,000 (equivalent to about USD 8) per tonne CO₂ and will increase by 5% annually until 2020. With this carbon tax applied, the government is expecting to gain IDR 95 trillion (equivalent to about USD 10 billion) in revenue (Wardhana, no year). The main source of the emission in Indonesia comes from deforestation and land conversion, while emission from agriculture and waster are small. Emission from energy sector is also small, however, it is growing exponentially (PEACE, 2007). The Green Paper outline the strategies that Indonesian government is going to do in energy, land-use change and forestry, international carbon finance and institutional development sector. However, it points out that energy sector is a concern as there is a growing demand by 7% annually (Ministry of Finance, 2009). Therefore, this review will focus more on the policy in energy sector.

There are two ways that the government can implement in order to reduce emission in energy sector, which are carbon tax and emission trading. The advantages and disadvantages of each method are listed in Table 1.

Table 1. Advantages and Disadvantages of Carbon Tax and Emission Trading

            Source: Ministry of Finance (2009)

The emission from energy sector has been increasing due to the growing Indonesian economy and the fact that the reliance of using coal to generate energy because by using coal, not only that there is a the belief that it is the cheapest source of electricity, but also it will help to reduce the reliance to oil imports. Moreover, government is also sending a signal to strengthen the belief by giving energy subsidy making the producer to bear no cost to emit GHG. Thus, the most efficient way to solve this is to stop the subsidy and introduce price to emission. By introducing a price for emission, it will be reflected in the price of the final goods causing users to substitute with lower priced products creating an incentive for the company to reduce emission. In the long run, after introducing a moderate carbon tax and when carbon measurements and accounting system are already capable to support emission pricing beyond fossil fuel combustion, carbon tax can be replaced by cap and trade, allowing a more cost efficient way to abate emission. By introducing USD 8 tax, it is expected to reduce emission by 10% by 2020 and that the revenue generated will be used to help the poor to survive the price reform as prices will definitely go up and they won’t be able to afford as much stuff as before. However, this USD 8 carbon tax is lower than international carbon tax, meaning that the government will not be able to utilize the abatement opportunities to the fullest, thus, the Green Paper propose to move away slowly from tax to emission trading with linkage to international market (Ministry of Finance, 2009).

Carbon tax has several advantages, such as increasing government revenue (increase GDP) and giving incentive to companies to innovate to reduce emission. As stated in the green paper developed by the ministry of finance with Australia, the revenue will then be used to help the poor families to adapt to increase in prices as carbon tax means an extra cost in production which will be transferred to consumers. It is also supported by the paper written by Yusuf and Resosudarmo (2008) stating that the implementation is not necessarily regressive due to structural change and resource allocation. The key here is structural change, which can be very ambiguous in developing countries like Indonesia due to the high level of corruption and low level of enforcement. If there is no improvement on the structural change, the probability of the fund to be received by the lower income households and those living in rural areas are very low. Moreover, people living in provinces that located further away from the capital city are the one that should be considered to receive higher allocation of the tax revenue, as they have to pay ten folds to purchase the same goods, but this is highly unlikely due to the loose central government supervision in those areas.

Reducing GHG emission in developing countries such as Indonesia will impose a greater good for the world. Introducing carbon tax will also help to increase the country’s GDP through tax revenue. Although it seems to be a good solution for both the countries and the world, the implementation should be considered carefully as the citizens might be the one to suffer the most without the support from the government.

REFERENCES

Arup, Tom. 2009. “Indonesia Plans Carbon Tax, Geothermal Push,” The Sydney Morning Herald Online. Home page online. Available from http://www.smh.com.au/national/indonesia-plans-carbon-tax-geothermal-push-20091207-kfcl.html Internet; accessed 10 March 2014.

Ministry of Finance. 2009. “Ministry of Finance Green Paper: Economic and Fiscal Policy Strategies for Climate Change Mitigation in Indonesia, Ministry of Finance and Australia Indonesia Partnership,” Illegal Logging Portal Online. Home page online. Available from http://www.illegal-logging.info/sites/default/files/uploads/IndonesiasiaranpdfGreenPaperFinal.pdf Internet; accessed 10 March 2014.

PEACE. 2007. “Indonesia and Climate Change: Current Status and Policy,” World Bank Group Online. Home page Online. Available from http://siteresources.worldbank.org/INTINDONESIA/Resources/Environment/ClimateChange_Full_EN.pdf Internet; accessed 10 March 2014.

Wardhana, Irwanda Wisnu. “A Policy Paper: Supporting Indonesia’s Carbon Tax Proposal,” Badan Kebijakan Fiskal Online. Home page online. Available from http://www.fiskal.depkeu.go.id/webbkf/kajian%5CSupporting%20Indonesia_s%20Carbon%20Tax.pdf Internet; accessed 10 March 2014.

Yusuf, Arief A. and Budy P. Resosudarmo. “The Distributional Impact of Environmental Policy: The Case of Carbon Tax and Energy Pricing Reform in Indonesia,” University of Tasmania Online. Home page online. Available from http://www.utas.edu.au/__data/assets/pdf_file/0011/407459/20130830_Resosudarmo_1.pdf Internet; accessed 10 March 2014.

It’s week 6! Just when I felt happy because my misery in trading is coming to an end, I got a very pleasant surprise. Yep, what else is better than seeing my portfolio gaining a 14.96% return! Highest return I’ve ever got so far! Figure 1 shows my current portfolio as of Oct 25th and figure 2 shows my final portfolio over the course of 6 weeks trading.

Figure 1. Potfolio Summary

Figure 2. Final Portfolio

So, what exactly happened?

As all you know (if you follow my weekly blog posts), I’ve been holding living cattle contracts for a good 5-6 weeks now. The price of living cattle went high the first week after I bought the contract but remained constant after. However, yesterday the price of living cattle suddenly reach 5.9%, highest in 5-6 week period. Looking back at its price history, I’m pretty sure it will go down again back to the constant price I’ve been seeing for the last 5 weeks. So, I decided to go short on further month (Feb’ 14) contract, expecting the price will go down and it does, eventhough it’s not as much as I expected. However, I still gained a bit from that as you can see in Figure 1.

The wall street journal reported that US Live cattle futures went high hitting record price due to tight supplies due to prolonged drought in US Great Plains. My speculation that the price of live cattle won’t go any higher is also supported by the article. It said that higher beef prices will eventually face resistance from consumer. Since beef and pork or chicken is substitute, consumers have started to switch to pork and chicken which are currently cheaper.

As I stated before since beef price soars high (giving me lots of profit), consumers start to switch to its substitute, which is pork and chicken driving hog price high too due to the high demand. In addition to that, there has been a reduction in pork slaughter due to Porcine Epidemic Diarrhea (PED) virus found in US lean hogs. It is a virus that causes acute and severe diarrhea in all ages of pigs (Ken Scwhartz and Roger Main, 2013). This series of events have helped to drive up the futures price of hog. Fortunately, it also happens that I’ve been holding lean hog futures contract. Both livestock contracts have gave me quite a high return in only a day period! A  good day indeed, worthy of celebration (*cheers*).

Nothing quite exciting happens in grain market. Corn price trends downward as there is an expectation of high harvest in US. It is said to be the largest on record. Wheat price is still strong due to crop losses in Argentina driving the demand from US, third largest wheat producer and exporter (Investing.com)

What’s up in the next few weeks?

USDA Crop report on Nov 8! This might be a game changer as USDA decided not to release October report after the 16-day government shutdown. Be on the look out people! =)

Enjoy the weekends fellas! =)

Cheers

Finally, after 5 weeks long my portfolio shows an all green from all my open positions *cheers*!

Doesn’t it look nice?? 🙂

Here’s what happened this week:

1. 7-month high living cattle

Speculators went long on living cattle futures expecting that there will be a tighter supply of cattle in the upcoming months. Seems like I share similar thoughts with them. Based on the lesson that we got, should we start to consider going short on living cattle? It is said that as more speculators go long on future contracts, it will bid the price down (Econ 101). But wait, hold that thought! Reuters reported that thousands of cattle were lost to the freak blizzard in South Dakota a week ago. This further squeezes the supply for living cattle. Short supply means price will stay high for the time being (another econ 101). So, should we go long or go short on living cattle contracts? I’ll leave that part to you to decide 😉

2. Lean hog price settlement

My Oct’13 Lean hog contract expired on 15 Oct and I gained a bit from that and decided to buy the March ’14 contracts as I believe that the livestock market still shows a promising return (December is coming remember?). There is one thing that’s interesting on this Oct’13 contract expiry though. As we all know, US government has just ended its shutdown yesterday (Oct 17). So, with no cash market data supplied by USDA when the contract expired, how was the final price settled?

When contract expired, the futures price should be the same with the current cash price. However, with no data supplied by USDA due to the government shut down on the contract maturity date, this goes under the category of “force of nature”. The rule book of trading decided that if there is a force of major (like this), the price settlement will be based on the weighted average of the previous trading price, which in this case is Oct 11 and Oct 14. This opens up a lot of chances of price manipulation. However, CME group said that they will step up to do a surveillance of the pricing formula in order to prevent price manipulation from happening.

3. Soybean is bullish

As corn and wheat prices fell, soybean rose high as speculators expected a lower supply due to slow harvest in the central area of the US, the biggest producer of soybean. Jeff Wilson from Bloomberg reported that Southern Nebraska and central Alaska were at risk of frost or freezing weather. Rains also delay the harvest as it prevents farmers from going to the field, but, Tim Emslie, a research manager in Minnesota, promised that farmers will get back to the field later this week so that the rally may be limited. Since traders don’t know what is actually happening to the crop as USDA hasn’t released any crop condition report due to the partial government shut down, they can only predict that there will be limited supply. For those trading soybean, you better watch out when USDA releases the crop condition report. It may go with your prediction but it may also go the other way.

After US government ended its partial shutdown and USDA gets back to work on Thursday, these last couple of weeks of October will be a dreadful one for speculators. Earlier this month when the government decided to shutdown causing a limited data supplied by USDA, one of the biggest producers of grains, traders were afraid of the day they start to operate again. Lack of data might have given them a hard time for the last couple of weeks, but the questions are, when the data is available again, will it support the speculations or not? If it shows different numbers, how big is the difference between the actual data and the speculation?

Before I wrap up my weekly post, here is a good “food for thought” to think about

“Why is the man/woman who invests all your money is called a broker?”

Leave me a comment if you know why since I’m pretty curious on the answer as well =)

Have a great sunny weekend peeps!

Cheers

Happy thanksgiving!

First of all, enjoy the long weekend everyone, even though it’s not a happily spent long holiday for everyone (students, for example, we got midterms coming!) but hey enjoy the turkey! It only happens once a year ;p

Okay, now back to business,

Market this week is pretty calm, no drastic changes whatsoever until today! Corn price went down, BIG TIME! (good for me because it brings me back to the green 🙂 ) Figure 1 shows my current position to date and figure 2 shows my portfolio summary.

Figure 1. Open position

Figure 2. Portfolio summary

The Weekly Recap!

1. Trading in the Dark

As I said last week in my previous post, Oct 11th, which is today, is supposedly the time for USDA to release the important monthly crop, but as you all know, the government is still firm on continuing the shutdown. This is the first in 40 years that traders have to trade grains in the dark with no USDA report. Dennis Collins, a director in Trilateral Inc in Chicago, pictures this as a pilot flying a plane then suddenly the flight controls goes down.

Traders are trading with a blindfold

There is one advantage of this issue, which is low price volatility as traders chose to stand on the sideline and not speculating much. On previous post, I expected that price will go down, however, Kim Anderson in South West Farm Press stated that the absence of USDA report will have little effect in price. She said USDA report is generally the one that’s considered unbiased, accurate and consistent compared to commercial report, but in the absence of it, the market will not stop. It will continue to look for data, even though they have to use the commercial one. She also predicts that price volatility will peak after the shutdown is over if the data speculated is completely different with USDA report. So, we better watch out!

2. Bullish Wheat, Bearish Corn

Wheat price is staying strong causing me to lose money all week long as the demand of wheat from China is still high ( ;( ), however, corn price went down today. This is said to be the lowest in three-year for corn as the dry weather is speculated to help a record harvest in US, a major producer of corn. Moreover, biofuel mandate that has been one of the reasons of high price in corn, as government is trying to scale back its mandate. EU, for example, is going to cap their biofuel originated from food source to 5% by 2020.

This week market is even boring than last week,

Feeling meh?

but, looking at the bright side, no stressful day caused by the price spikes ;p

Anyhow, I’m planning to try a new trick next week, hope it works!

Have a happy thanksgiving once again fellas! I’m gonna go get my turkey!

Cheers 🙂

Week 3!

Half way to go! and yet not making any money 🙁

Things are looking better for me this week, even though I still lose my profit on wheat. Figure 1 shows my position as of today.

Figure 1. Open Position Status

And this is my portfolio overview (figure 2) so far also my portfolio summary (figure 3)

Figure 2. Portfolio Overview

Figure 3. Portfolio Summary

Here goes my weekly recap!

The market has been pretty quiet this week with no sudden spike of prices (*phew!*). It was good decision to stay on my ground for this week, as corn price is going down again, while the live cattle and lean hog prices go up again regardless of the US shutdown. However, I really need to stop losing on wheat as its price stays high. So, these are the updates:

1. US government shutdown

As of Oct 1st, US government has shutdown because they can’t reach mutual agreement on US budgeting plan. A first after 17 years! Even though USD fell after the shut down, it doesn’t show any significant impact on futures contract prices. According to CBC news, there are only a few signs that it will end soon and it’s been the fourth day! As stupid as this may be, if this goes on it will affect not only the 700,000 unpaid government employee, but also world economic as USA is one of the main players in it.

2. USDA report

The release of USDA report on monday, Sept 30th, didn’t really affect the prices of the commodities much. However, due to the US government shut down, access to USDA statistics is blocked leaving the food producers and traders in the dark, not knowing what world’s largest farm exporter activities are.

Yep, that’s what I thought too!

The next anticipated report is the monthly crop estimates that should be released on Oct 11th, however, if the shutdown keeps showing no sign of ending, the release of the report will be delayed and that for sure will cause troubles for producers and traders since the report will cause price spikes of the future contract. The only positive thing that comes from this “lack of transparency due to government shutdown” is the fall of USD currency that promotes buying activity. Nonetheless, according to agrimoney, there are serious concerns of “walking in the dark and falling to an abyss” from the commodities player due to the lack of transparency. That’s why people are starting to stay on the sideline and worst, leaving the market. This will probably drive the price down as people are selling their contracts.

You don’t want to “misheard”

Question then arouse, if USDA is shut down, then why does the price of live cattle and hogs are still bearish? They did fall quite a bit in the middle of the week, but they went up strong again today. This is because even though they USDA is shut down, there are laws regarding meat that basically saying that they need to be certified before entering the market. Thus, if there is no certification due to USDA shut down, the market will go default, which is unwanted. So, they still assign people to work on it regardless of the government shut down.

What’s next?

As I said earlier, this week has been pretty quiet mainly because of the US government shut down, causing people to sit on the sidelines.

Looking at this condition, I’ll keep my position while looking for chances to cover my wheat contracts to stop my lost since there’s still strong international demand due to the bad condition in Argentina, China and Brazil. The next big thing that we will have to keep an eye of is the monthly crop report on Oct 11th. That is if the government can come to a mutual agreement before that. If not, I expect a fall in price as people won’t like to “bet” on uncertainty.

End of week 3, still scratching my head learning the market, but it’s a working progress. A quote from a friend of mine working as a palm oil trader:

“I remembered those days vividly“- Ricko Gosiga and Andreas Tjoa

This makes me at ease because I know that everyone has a rough beginning in this market! =)

Cheers!

Hi there!

It’s week 2 of the futures trading game! Gain a bit, Lost a lot!

Here’s a peek on what I have on my portfolio by today to give you a picture on how bad it is (figure 1):

Figure 1. Open position

This is my Portfolio Summary of the ending of week 2, as you can see, I’m bleeding! However, week 2 wasn’t that bad, I was given a taste of victory when my portfolio went back to green that puts me up in top 5 ranks and gaining some money (Figure 2 and 3). But, just like a roller coaster ride, I didn’t stay up long in that position. In fact, my portfolio crashed down. I do have some lessons learnt over this ride to share, so here goes!

Figure 2. Historical Portfolio Value

Figure 3. Portfolio Overview

Lesson 1. “Listen to your instinct” 

Believe it or not, sometimes gut feeling works wonder. At the end of week 1 or beginning week 2, I have this random thoughts that suddenly popped up and bugged me. It’s about the month of festivity that’s coming, which is December. As you all know, December is the month where people spend most of their annual salary on christmas presents and annual get away. It is identical with long holidays to have some family quality time. So, i thought, festivities mean food and by food I mean lots of them. This leads me to buy the futures of living cattle and lean hogs as I predict that demand of meat will go up. Turns out I was right, even though the price went up mostly not because of that. But hey, gut feeling is proven to be worth listening to! Figure 4 and 5 show the market trend of lean hog and live cattle respectively from CME group website

Figure 4. Lean hog market trend

Figure 5. Live Cattle market trend

Lesson 2. Market always goes to wherever it wants to go.

Since I have no good insight of the futures market, I decided to look for an expert predictions and came across Philip Shaw’s market commentary on Grain Farmers of Ontario web page. He predicted that corn price will not waver and revolve around current number and that wheat is trending down. Of course I didn’t go on short right away after reading this. I followed the market price for two days and seems like he was right. So I went short on both commodities and the next thing I know both price shot right up! There goes my green portfolio.

Lesson 3. Fundamentals approach is like playing roulette.

Information is the game changer in trading game. Having the timely delivered and precise information will change everything. In this simulation game, however, I have a very limited source even though they are reliable, for example, the no tapering issue. The market price went so high after the news was heard but then it plummeted after the prediction that tapering will still go on. This makes news as guidelines on what to buy and not to buy will always be “one step behind”.

Lesson 4. Delay, Delay, Delay

Stocktrack is seriously giving me a hard time! Delay in transaction means I lost one of the most important factor in trading, which is TIME! nothing I can do about this, so I’ll have to coupe with it, somehow.

Things to do for week 3!

1. Even though I have no idea of what’s going on right now in the market, as price volatility is so high, losing in trading only have two  options, be firm on your ground or exit right away and start fresh. For week 3, I’ll stay on my ground in hope that the market will actually go back to its predicted trajectory.

2. Try to learn Technical stuff to predict the market in order to survive longer. And yes, by technical I mean numbers and stats! Fingers crossed 🙂

References

Some cool and helpful websites for you guys to check out news of the market::

– Agrimoney

– Futures

– Top 100 Futures Blog (It’s a bit outdated, but it’s better than nothing)

Have a great weekend fellas and wish you guys plenty of luck!

Cheers =)

Hello folks!

It’s Friday, it’s weekend, it’s time to blog!

First week of trading game using stocktrack, a bit overwhelming since I have no idea what I have to do! Well, at least I know that I need to buy future commodities contracts at low price and sell at high price to reap profits, which I guess is the fundamentals in any business. Lucky me, I got a few friends who’re working for one of the major trading companies in Indonesia. So, I asked them for some guidance and they introduced me to the school of pipsology.

I believe that in a situation full of uncertainty, it is important to find, learn and understand the “know how” as many as you can. School of Pipsology provided good basic understanding of how to survive in a trading market. It is a website created for newbies to learn everything about trading (http://www.babypips.com). They have levels that correspond with materials for people with different levels and understanding. They are varied from preschool, kindergarten and all the way till graduation, not to forget the graduation speech!

The first thing that come up to our mind about school is “Ugh! It’s gonna be boring and dull!”. Scrape that! The school of pipsology is not boring at all! They are using unsophisticated sentences (if you know what I mean) to deliver the message along with simple yet funny examples and pictures to portray the idea. For example, when you first start going to “school”, you’ll see a monster picture, like this

to give us an idea how big New York Stock Exchange (NYSE) trades volume everyday, and this…

to picture how puny NYSE compared to the foreign exchange market (forex). I guarantee things like this will make the idea stuck to your brain easier and longer than a long boring paragraph!

Even though the school of pipsology mainly talks about the forex market and not specifically future contract, both of them still have the same basic idea. It can definitely be implemented on futures commodity trading. So, what are you waiting for? Go and check it out! It’s always best to go to a venture carrying as many supplies as you can to survive.

Truthfully, I haven’t traded that much during this first week. I did try to trade using stocktrack and ended losing around $2,000 in a glimpse. But, oh well! This is what I got for not finishing the lesson in school of pipsology ;p

Hopefully this blog will shed some lights to you guys who’s also having a hard time figuring things out in the trading game like me.

Cheers and have a good weekend!

P.S. wait for my blog post next week on my performance and things I’m going to learn the hard way in trading! Fingers crossed!