1. China Daily

(http://usa.chinadaily.com.cn/)

As we all known, if you want to be a good trader, you must keep eyes on China’s supply and demand movements.

China daily is an English language state-controlled daily newspaper published in the People’s Republic of China. China Daily is organized into seven sections.

1. Prime:      Top headlines
2. China:      Domestic stories
3. Focus:      Featured stories
4. Life:      Entertainment, cultural events and soft news
5. View:      Editorials and opinion
6. Business:      Business Newss
7. Sports:      Sports news from around the world

The parts in bold are worthy reading here.

2. Business Recorder (http://www.brecorder.com/markets/commodities/america.html )

This is a useful website to search for related commodity’s news. The special design of this site is that business information is not classified by commodities, it is classified by districts (America, EU, Asia…). I think it’ll be clear and helpful when you do analysis on the  different agriculture productive areas.

1. As I mentioned in my blog last week, now the price of soybean is mainly impacted by world’s demand. Recently there is news about Chinese increasing demand toward soybean, so I boldly predicted there will be a slight short-term increase in soybean’s price.

“China’s soybean imports are likely to touch a record high of 57.5 million metric tons in 2012, up 9.3 percent year-on-year, due to the country’s booming demand and shrinking domestic output. China’s soybean growing area fell 13.8 percent from the previous year to 5.79 million hectares in 2012, marking five consecutive years of decline, according to data from the Ministry of Agriculture. The ministry forecast that yields will likely decrease 5.3 percent year-on-year to 1,693.5. kilos per hectare because of a summer drought, causing the country’s total soybean output to a three-year low of 9.8 million tons. ” (News from Beijing http://usa.chinadaily.com.cn/business/2012-10/29/content_15853350.htm )

Falling domestic output suggested that China is becoming more dependent on the global market.

According to the latest report from the US Department of Agriculture, China’s soybean imports will rise to nearly 61 million tons next year, up 3 million tons from 2012.

2. Although I hold an optimistic view toward soybeans future market, I’ll still be very cautious. The hurricane’s impact on the agriculture and the coming harvest of South American soybeans also deserves attention.

This week my equity fell down from $30667.26 to $ 28429.91.

The main loss is due on the mistakenly judgement on the soybean’s market.

The form below shows the movement of my trading account during this week.

Last week soybean experienced a modest drop. At the beginning of this week, I was thinking about to go long on S2X (because there is often a rebound after a decline). However, after analysing the historical futures chart, I found there is still a big space for the soybean to decline( as the     shown in the chart below ), so I kept going short on soybeans.

However, several news released this week made the soybean market rise violently.

1. http://online.wsj.com/article/DN-CO-20121023-012617.html

“ ’Chinese demand is still high and the U.S. is basically the only game in town for global soy supplies at the moment, a strong underpinning influence for prices’  said Arlan Suderman, senior market analyst with advisory firm Water Street Solutions in Wichita, Kan.

The U.S. is buoyed by strong export demand, led by China, the world’s largest soybean importer. “

2. http://www.brecorder.com/markets/commodities/asia/87940.html

“ Indian soybean futures surged more than 3 percent on Thursday to hit the highest in a month on gains in overseas markets and as local oil millers were aggressively buying in spot markets due to good export demand for soymeal.”

Don’t rely too much on the technical analysis, keep eyes on the related news!

After a long flagging period in last week,  I made a big turn over this week——a profit of $3511. I changed my strategy this time and kept eyes on the fundamental plane more often. I made 4 movements in 3 days, and I think it was the accurate forecast and timely action helped me success this time.

Now, my current equity is  $30667.26. My movement are as following:

1. 10/17/2012 Movement:

Went 1 long on Nov. (S2X)

(Price in: $1498)

2.10/19/2012 Movement：

Offset 1 long on Nov. (S2X)

(Price in: $1498, Price out: $1541.5)

3. 10/19/2012 Movement：

Went 1 short on Nov. (S2X)

(Price in: $1541.5, Today’s Price: $1534.25)

4. 19/10/2012 Movement:

Held 1 short on wheat (W4K)

(Price in: $860.25, Today’s Price: $840.75)

Reason for the first movement:

Demand! Demand!

1. As USDA’s report (10/16/12012) said “The October soybean forecast, at 2.86 billion bushels was about 90 million bushels larger than the average trade guess and 126 million larger than the September forecast.” (http://www.agweb.com/article/analyzing_the_october_corn_soybeans_production_forecasts/ ) After reading this news, I interpreted there will be an increase as a reflection of stronger demand than had been previously forecast.

2. “After doing a research of the rate of soybeans’ storage and usage, Kluis(Agriculture.com Market Analyst) says ‘At the current pace of bean usage, the market’s response is that we are not going to have enough crop on soybeans. If we continue using soybeans at this pace, we will either have to shut down plants or import beans from South America.’”( http://www.agriculture.com/news/crops/farmers-alysts-still-bullish-cn-soybes_2-ar26920Farmers)

The following picture shows the expectation of speculator:

( http://www.agriculture.com/news/crops/farmers-alysts-still-bullish-cn-soybes_2-ar26920Farmers )

Reason for the second and third movement:

Psychology cycle !

The world’s demand towards soybean, added with the commercial speculation of the South American weather had already driven the price of S2X rise fast for 2 days. The only reason I offset the long contract and turned to the short is that I think the price($1541.5) is high enough. That is the time for those speculator to back out. Later, the market proved that I was right.

Reason for the forth movement:

The reason for this movement has already been announced in the last blog. “From the USDA’s report, there is a signal of higher yield of both corn and wheat”. This time, I made a decision to hold this contract for a long period. Because after analysing historical wheat trade data, I  found the price will land smoothly. So that means, after experiencing a sharply increase (because of the heavy drought) , the price of wheat must face a gradually decrease.

1. http://www.soymaptoolkit.com/

If you’re also a fan of soybean market, then this website must be very useful to you. On this website, you can easily find the weather report and track the status of soybean production in Illinois (the main produce area of soybean in America).

2. http://www.agweb.com/

This is a fantastic website integrating much useful latest agriculture news. And you can also learn a lot from the experienced analysts’ articles. Gentle Reminding: Make decision by your own, don’t be pushed around by the analysts’ words. What they are is only a reference.

Good luck!

Generally speaking, in the short term, the price of soybean will increase again after the drop in this week. However, in the long term,  I think the general trend of this crop’s price is being smooth after several phased decrease .

I think the key point for forecasting the short-term performance of soybean is to judge the demand.Demand estimates likely will overshadow supply projections.

“Allendale (a forecasting and brokerage firm in McHenry) expects higher soybean demand to partially offset increases of 39 million bushels in beginning stocks and 139 million bushels in overall production. The firm expects USDA to increase ending stocks of soybeans to 137 million bushels from its September estimate of 115 million bushels.”

As we seen, soybean exports are fantastic. USDA’s (2012-13) export goals will be met in the first 5 to 6 weeks of the crop year. The question is how dramatic of a fall in exports do you factor in when South America’s crop comes on line.

South America’s new-crop soybeans will become available for export in March, but orders for the crop will be coming in over the next several months.

Therefore, because of the uncertainty of the main producer’s export volume, the relationship between supply and demand becomes much more tension, which will lead to a temporary increase in soybean market.

B.T.W. another point which is worth paying attention to in the coming days is the commercial speculation of the weather in South American producing area.

A new site that has different information on various commodities is the futures.tradingcharts.com website. Contains a variety of information on different commodities that includes production from different areas.

www.futures.tradingcharts.com

On Friday, Informa said the USDA will likely raise its corn and soybean production forecast. Moreover, Commodity brokerage INTL FCStone also raised its corn and soybean forecasts last week as harvest reports topped expectations.

Therefore, I believe that both soybean and corn prices would shift down next week, I will short on both soybean and corn.

The wheat market, however, is being supported by supply concerns arising out of Australia where the crop is suffering from lack of moisture. Australia’s wheat production is likely to decline from the government’s most recent estimate. I suggest go long on wheat contract.

This week， I made a wrong judgement about the soybeans market, which lead to a huge loss of  (-) $5750. I bought 5 contracts of S2X and kept it for a week, expecting it could reverse after the long bear market. However, the result turned to the opposite way— the soybeans’ price continued decreasing all week long.  Simultaneously, considering the same price trend of the soybeans and wheat, I sold one contract of wheat (W4K) for risk hedging. So the consolation is I gained (+) $1125 from this movement.

Now, my current equity is  $34383.98. My movement are as following:

1. 09/30/2012 Movement:

Went 5 longs on Nov. (S2X)

(Price in: $1573, Today’s Price: $1550)

2. 02/10/2012 Movement:

Went 1 short on wheat (W4K)

(Price in: $860.25, Today’s Price: $837.75)

Reason for the first movement:

On Sep 28^th, the USDA posted a news that “domestic soybeans inventories as of Sept. 1 were 169 million bushels, above the average analyst prediction of 132 million bushels”. After experiencing last week’s “fake news”, I thought the market would be more rational. What’s more I thought there must be a grace period after the news releasing. So I did such movement.

Reason for the second movement:

Two days have passed, but there was no sign of recovery in the soybeans market. I was a little worried about it, considering the similarity in the price trend of wheat and soybeans, then I went a short on W4K.

Until now, the price of soybeans and wheat are still going down. From the USDA’s report, there is a signal of higher yield of both corn and wheat, so I won’t offset  the wheat for the next week. Certainly, I’ll still keep eyes on the latest news.

Turn to the soybeans market, I was puzzled cause this crop’s price is really volatile. Latest news, along with the speculators, impacted this market a lot. So Is it the time that I should turn to another commodity? Can u guys give me some suggestions? Thanks~