FRE501 Trading Lab

Hi!,

This week I traded Cacao. I went short because I saw the price going up and fortunately it continued like that although at a slow rate so I think that is a signal I should offset this position soon by going long.

On the other hand I had some contracts of orange juice that hadn’t liquidated. Orange Juice price had started to decrease very fast and indeed the profit I had made there had vanished completely. I didn’t get rid of that because I was very busy this week. However, when I checked today, the price started to trend up surprisigly, so I recovered my profit.

José

Hi!,

Given the news about red meat classified as a cancerogen by the WHO on Monday, price of live cattle plummeted. However, one important thing to notice is that the type of meat classified as that is bacon, sausages, ham, etc, so technically beef is not among those products. Although I know that it can be processed to make beef sausages, but some of the news sources exaggerated by saying that all types of meat were cancerogen, so that is part of the market over reaction I think.

That is why I don’t think that the news is going to have a large impact on beef prices in the long run. Therefore, I decided to take advantage of today’s prices in order to arbitrage the spread and sell it once it recovers in the future. Morevover, I saw that some classmates that had many contracts of coffee and were severly affected during the recent price decline, were improving a bit and after checking the coffee price contracts I saw that they were gradually trending upwards, so I’m aticipating that prices will rise again, will they be exactly as when some of my classmates were on the top of the rankings?, I don’t know, but I expect to make some kind of profit even if it is not very large.

Finally, I bought other commodities like cotton and cocoa on the same basis as I bought coffee, their prices had recently fallen too much, but were gradually doing better in the last few days.

Hi!,

This fourth week trading was a hard one!. Almost all of the commodities we are allowed to trade we’re bearish, so it was hard to know which one should we bet for.

I consulted some websites about the futures contracts returns like barchart to see how the contracts were trending. Moreover, I also looked at the historical prpice charts as I always do.

However, as I said it was difficult have strategy for the commodities we need to trade. One possibility of the falling of almost all of the agricultural commodities was the USDA crop progress report released on Monday October 19th in which it revealed that most crops are expected to have a strong yield in 2016.

I went long a contracts of wheat because I saw on barchart that some contracts were trending up, but the day after I was having big losses. Also, I went long on sugar and cocoa, but had the same result as with wheat. Therefore I went short in all of those contracts.

The only commodity in which I was fortunate enough to make profit this week was with orange juice, although it’s been modest. I went long on that because I saw that the contract I already had were still trending up.

José

This week was very interesting, most of the commodities we can trade were falling so it was really hard to know which one I should buy.

That is why I just bought the Orage Juice because as weird as it is, it was the only one that had a clear upward trend after reviewing the price charts.

Moreover, I think this I will go short on my contracts of timber, since most of the week they fell, most acutely the one I have for december 2015, so I think that I am at risk of losing the profits I have made by keeping those assets.

Finally, I regret to say that at the beginning of the week I went short on a cotton contract I had, I thought the price was falling, but I turned to jump again.

Hi!,

This week I traded wheat, but I lost -500 USD. I read on the news that there has been bad weather in Russia, and since I have herd from other classes that Canada has also struggled recently with its production I thought that the price was going to increase. However, it did not happen and in fact in plummeted very quickly, so I did not hold those contracts for too long and sold them before I continued to lose more.

After that, I continued to research about the prices by looking at historical price charts, and I saw the price of timber was increasing. Also I read on the news that the housing market has recovered very well in the US since the recession and is now one of the reasons the Federal Reserve might increase later this year its interest rate. Therefore, I bought contracts of timber.

Moreover, I herd from some of my classmates about the gains they were having in commodities like cotton and rice, I looked at their historical prices, and yes they were increasing, so I bought sugar and cotton. However, both of them have been very volatile and I was not willing to take too much risk given the bad experience I had with wheat, so as soon as their prices decreased I went short.

José

Hi!,

This has been my first week trading agricultural commodites, and so far so good!.

I went long on three contracts of coffee for december 2015, one contract of oats also for december 2015, and two contracts of corn for march 2016.

My strategy for buying coffee was that on thursday I checked the Nasdaq lastest price chart (http://www.nasdaq.com/markets/coffee.aspx) and saw that after a long decline on its price it was now going upwards, but since I couldn’t find a forecast I didn’t want to go long very far into the future.

After seeing how the price for coffee was doing, I thought maybe Oats was going to perform in the same way, even though it was still decreasing when I went long, so I decided to take the risk, but not far into the future either.

Finally, I decided to buy corn because the price was increasing on the day I bought the two contracts, and since I had already bought two commodities for december 2015, I thought maybe I should risk and buy for march 2016 to see what happens, a little bit more into the future, but not too far.

I think that for my next transactions I will try to find more forecasts and also try to find more sources on the news in order to take a better position, perhaps farther into the future.

On the overall I doing very well!, I have a 2.42% portfolio return and I rank 4th in class! (I don’t mean to show off lol),  this is thanks to the coffee contracts I have.

José

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