This week I went short 1 contract each of December Corn and Wheat and realized total gains of $889 ($237 on Corn and $662 on Wheat). I also entered into the market for only 1 day (on Friday) because I was not sure whether the bugs in TradeSim had been resolved. To be cautious, I decided to trade fewer contracts for a shorter period of time.
Prices had been declining for corn in the latter part of the week due to an appreciating US dollar. Although corn prices have risen dramatically since the news of the drought, the sources I consulted pointed to the fact the current higher price levels are “rationing demand” (1) and the low export sales this week (slower experts to China and Japan in particular) are leading to a downward trend in prices. This view was supported by technical analysis done by other experts (1) as well so I decided to go short on Corn for Friday. This was a good decision because prices did in fact drop as expected.
[price in: 742.50; today’s price: 737.75; committed: $1080.00; gain/loss: $237.50]
Wheat prices also declined in the later part of the week, due again to a higher US dollar. I expected that since wheat and corn are substitutes as animal feed for which reason their prices generally move in tandem, wheat prices could also be expected to decline following lower corn prices. Wheat price did in fact fall on Friday due to pressure from lower corn prices.
[price in: 877.00; friday’s price: 863.75; committed: $2025.00; gain/loss: $662.50]
One reply on “Week 5: What Went Right”
Good analysis on the currency effect. Enjoyed reading. Great work!