FRE501 Trading Lab

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.