Not So Gloomy
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!
