Month: November 2012

The fiscal cliff will give a negative influence on future market. I will offset my long contracts of soybeans as soon as possible.

I will not go short contracts of corn next week,because the Environmental Protection Agency has rejected requests from several governors — including Virginia’s — to waive fuel standards that require more corn to go toward making ethanol.The renewable fuels law will require production of 15 billion gallons of ethanol by 2015, up from 13.2 billion gallons this year.That will require an increasing amount of corn, which is used in making ethanol. That’s great for corn producers, who are seeing their crops’ prices go up, but bad for other farmers — like poultry and swine farmers — who are watching feed prices go up as well. There is an conflcting indicators in corn markets. It is hard to make a prediction.

In compairson, it is easy to make a prediction in soybean markets. The soybean price is predicted to fall in the next week because of the strong sign of fiscal cliff.

I will go short of soybean next week.

Chicago Board of Trade (CBOT) soybean futures ended lower on Thursday suspended for two days in a row of gains. Investors offset long positions due to “financial cliff” worries and good weather conditions inSouth America. Agricultural market price and theU.S.stock market all fell, the financial investors worried that cliff would not be resolved, theU.S.economy may be in recession.

 The term “financial cliff” , was first proposed by Federal Reserve Chairman Ben Bernanke at a congressional hearing in February 2012 .It refers to the series of increasing income and reducing expenses fiscal policy will fail at the same time ,January 1, 2013, according to the current law in theUnited States. Once these policies are triggered to occur, the United States 2013 federal austerity will reach about 600 billion U.S. dollars, accounting for 4% of GDP. This huge fiscal tightening may directly pushing theU.S.economy down tor cliff recession.Fiscal policy mainly refers to the 2001 to 2003 tax cuts, the alternative minimum tax rate (AMT), wage tax credits, automatic spending cuts mechanisms, emergency unemployment relief bill, the Affordable Care Act (Affordable Care Act, ACA)

The ” financial cliff  cause a direct recession of the U.S. economy,as well as,financial cliff ” cause a negative spillover effect,which will spread to the United States at the same time and international market.Firstly, the “financial cliff” caused  uncertainty which depressing market confidence, suppressing corporate capital spending and private consumption.  Finally, the negative impact of the “financial cliff” to the U.S. economy transfer to the other countries through trade, financial markets and other channels.

It is predicted a recession in future markets.

Ending balance as of 11-16-2012,

        Position Value:  $2700.00

        Cash Available:  $42857.69

        Equity:         $45557.69

        Realized Gains:  $6918.00

This week I do an experiment, proving that even though the information gives a sign of unbelievable continuing fall, the price trend are the same as the information shock. It is a failure to guess the market trend by the common sense that the price is predicted to increase after a big fall. It is not kidding to analysis and collect information before investment, otherwise, an imprudent guess can lead to big loss.

I bought two contract of soybean, against the information sign of the increasing production by USDA report. I guess the price will increase after two weeks’ fall. But I lost $2069 in a week. How important to abide with the investment rules about the negative influence of supply increase and currency depreciation.

Chicago Board of Trade (CBOT) soybean futures ended lower on Thursday suspended for two days in a row of gains. Investors offset long positions due to “financial cliff” worries and good weather conditions inSouth America. Agricultural market price and theU.S.stock market all fell, the financial investors worried that cliff would not be resolved, theU.S.economy may be in recession.

I ignore such an important news about fiscal cliff.

For the most part, today’s USDA reports were negative for crop prices–more so for soybeans and less for corn and wheat. Corn prices are expected to remain in the sideways pattern experienced over the past six weeks while old crop wheat prices are expected to be supported within the wide range experienced since mid-July. Prices for the 2013 wheat crop are expected to remain strong based on production concerns. Soybean prices are in a clear downtrend, with some chance that South American production risk is now being under-valued. 

The soybean market will now be influenced by the on-going rate of consumption, particularly the pace of exports. Some recent sales cancellations reflect the substantial price decline since early September and prospects for a large South American crop. Development of that crop will now become center stage.The Crop Production and Grain Stocks reports to be released on January 11 will be closely watched for changes in the production forecast, with some change in the forecast of harvested acreage expected, and for the revealed rate of domestic feed and residual use of corn.

The USDA report will give an neggative indicators on market prcie increasing. I will continue go short of soybean and corn.

The USDA report is released this week,which rises the estimation of production.

The 2012 U.S. soybean crop is forecast at 2.971 billion bushels, 111 million larger than the October forecast and 80 million larger than the average trade guess. The U.S. average yield is forecast at 39.3 bushels, 1.1 bushels above the average trade guess, 1.5 bushels above the October forecast, and only 1.6 bushels below last year’s average. The average yield forecast was increased for all but seven states, with only the yield in Oklahoma reduced from that of a month ago. Outside the U.S., production forecasts were increased slightly for Bolivia and the Ukraine.

The forecast of U.S. soybean exports was increased by 80 million bushels, the forecast of the domestic crush was increased by 20 million bushels, and the forecast of ending stocks was increased by 10 million bushels. The projection of world stocks was increased by 90 million bushels (4.3 percent). The 2012-13 marketing year average price farm is expected to be in a range of $13.90 to $15.90, $0.35 below the October forecast.

The soybean market will now be influenced by the on-going rate of consumption, particularly the pace of exports. Some recent sales cancellations reflect the substantial price decline since early September and prospects for a large South American crop. Development of that crop will now become center stage.

The 2012 U.S. corn crop is forecast at 10.725 billion bushels, 19 million bushels larger than the October forecast. The U.S. average corn yield is forecast at 122.3 bushels, 0.3 bushels larger than the October forecast. The production forecast for the rest of the world was a fraction higher than the October forecast, with smaller forecasts for Europe and Mexico, offset by slightly larger forecasts for Southeast Asia and Russia.

Consumption of U.S. corn during the current marketing year is projected at 11.167 billion bushels, 17 million larger than the October forecast, reflecting an increase in the expected consumption for food and industrial purposes. However, the projection of imports was increased by 25 million bushels, to a total of 100 million bushels, so that the projection of ending stocks was increased by 28 million bushels.

Ending stocks for both the U.S. and the world are expected to be much smaller than stocks at the beginning of the marketing year. The marketing year average farm price is now projected in a range of $6.95 to $8.25, $0.25 lower than the October projection.

New projections differed from market expectations in several aspects. U.S. production is larger than expected, the forecast of the Argentine crop was not reduced as some thought might happen, and the projection of year ending stocks exceeds expectations. The corn market will now be influenced by the development of the South American crop, with emphasis on weather conditions in Argentina following an extremely wet October, and the ongoing rate of consumption, particularly the pace of exports.

The Crop Production and Grain Stocks reports to be released on January 11 will be closely watched for changes in the production forecast, with some change in the forecast of harvested acreage expected, and for the revealed rate of domestic feed and residual use of corn.

reference website http://www.agweb.com/news.aspx

                                    http://www.cmegroup.com/

This week, I went a short contract of corn and a short contract of soybean. I gain a lot in soybean, almost gain 100%.Additionaly,I gain a little in corn market, because of the soybean decreasing pressure.

I can gain a lot because many reasons. Gradually, I find that the future price is easy to be predicted. If the information is carefully be collected and analyzed, the trend is obvious for the hedger.

Last week, I mentioned in one of my blogs, U.S. dollar appreciated, weakening the consume power in the market, then the price was expected to decrease. And, two big companies released the information about the rise estimation of production and exportation. Many information indicated the trend would be downwards.

As we all know the corn and soybean is substitution, the trend of future market is almost same. So I often went the same contract in the two markets. It proved that the soybean market price influence negatively the corn price.

I often went 1or 2 contracts because I am afraid of high risk. But the risk-avoiding behavior make little gain as well. I am not confident about my analysis and prediction. If I make a good preparation, the trend of future market is almost the same as my prediction. These 8 weeks trade prove that.       

Beginning balance from 11-08-2012,

        Position Value: $7330.00

        Cash Available: $34741.35

        Equity:         $42071.35

        Realized Gains: $445.00

—————————————-

Paying interest of $0.05

Holding 6 – short on S2X                  mark to market

        price in:       1532.00

        today’s price:  1452.00

        committed:      $4625.00

        gain/loss:      $4000.00

Holding 7 – short on C2Z                  mark to market

        price in:       741.00

        today’s price:  738.75

        committed:      $1080.00

        gain/loss:      $112.50

Corn futures are trading lower midmorning. Corn futures are tumbling going into midday trade on spillover weakness in the soy complex and firm gains in the dollar index. Weekly export sales were once again disappointing this week. Current export sales totaled 167,900 tonnes, higher than the previous week’s sales but still on the low end of trade expectations. December corn futures are trading 7 ½ cents lower.

Wheat futures are trading lower midmorning. Despite solid losses in the corn and soybean markets and gains in the dollar index, wheat futures are posting marginal gains going into midday trade. Prices are currently being supported by technical buying. Dry conditions and poor condition ratings for the forthcoming winter wheat crop are also supporting prices. December wheat futures are CBOT are trading 4 ¼ cents higher; KCBT is trading 5 ¾ cents higher; and MGE is trading 6 cents higher. 

Soybean futures are trading lower midmorning. Soybean futures prices are declining as favorable jobs data boosts the U.S. dollar index. The jobs data pushed the dollar index over .60% higher. Downside momentum should be limited by firm export sales. Weekly export sales totaled 741,200 tonnes, which was slightly higher than expectations. November soybean futures are trading 20 ¼ cents lower.

Holding 6 – short on S2X                  mark to market

        price in:       1532.00

        today’s price:  1527.00

        committed:      $4625.00

        gain/loss:      $250.00

Ending balance as of 11-02-2012,

        Position Value: $4875.00

        Cash Available: $35821.65

        Equity:         $40696.65

        Realized Gains: $445.00

This week I continue a short soybean contract. The soybean future market is difficult to predict. The soybean market fluctuates this week. The soybean price decreases consecutive days, a slight rebound fell sharply, with large volume and open interest synchronization. Chicago Board of Trade (CBOT) soybean future was down 2 percent on last Friday, rising for the end of three days.

Fortunately, I did not offset it early.

The 2012U.S.soybean production forecast is raised, as well as the U.S. dollar deppreciation. Informa Economics estimated the 2012U.S.soybean production raised from 28.6 billion bushels to 29.25 billion bushels and the soybean yield forecast raised to 38.6 bushels from last month’s 37.8 bushels per acre. Commodity brokerage firm INTL FCStone estimatedU.S.soybean production was about 29.59 billion bushels this year, much higher than estimated 28.49 billion bushels. The company estimated that soybean yield was adjusted from the previous 38.2 bushels per acre to 39.1 bushels.

Estimations of the two companies are higher than the estimation report released in October by the U.S. Department of Agriculture. In November 9, the Ministry of Agriculture will release the latest forecast. The U.S. dollar depreciation weakens the competitiveness of American goods in the international market, which also gives the pressure on soybean prices. Ministry of Agriculture announced last week’s soybean export sales is at 760,600 tons, higher than the estimated 557,0 00 million tons.

Many indicators verified what I did is right.