Recap of Last Week’s Open Contracts
I was holding 4 long contracts for corn, 1 long contract for soybeans and 1 long contract for wheat. Since we did not trade last week because it was Midterm week, I tried to offset my long contracts to get out of the market before, but was unsuccessful. As prices for all these 3 commodities have increased moderately over the past week, I was losing profits so I planned to start the week off anew by offsetting my open contracts.
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Tues Oct.  25th
China’s demand for wheat from Australia would have a shock on the global supply of wheat (http://af.reuters.com/article/commoditiesNews/idAFL5E7LP2HV20111025). Supply of wheat on the market was expected to decrease from this, so the price should face an upward trend. For corn and soybeans from the techical analysis perspective, they show a bullish trend. Usually, when the prices of commodities are increasing, I would bid for futures long contracts. However, I was already holding long contracts for all commodities at that time, but was losing great profits. I did not understand why, because the prices indeed rallied moderately, but I was losing from my open long contracts. I decided to offset all my contracts and start anew (maybe there was a glitch since prices have not been updated since the past week….so I decided I will get out from the market first).

My findings are further strenghtened from my US exchange expert group findings, as the US dollar is expected to depreciate for a couple more days over the Europe debt crisis debate (http://www.fxstreet.com/fundamental/market-view/daily-us-forex-summary/2011/10/26/), but clearly forcasted to rebound as investors gain favour over the US dollar since the crisis has not been resolved yet. Margin balance at 77,650 by the end of the day.

Wed Oct. 26th
I was successful in ofsetting all my long contracts for all 3 commodities.. Thus, just like how I had planned, I can start anew as I now have 0 open contracts. My plan is to bid for short positions now because just like how we had predicted in our US exchange rate expert group, the US dollar has rebounded because of the European debt not coming to terms, so investors are once again turning to the safe haven “US dollars” (http://www.rttnews.com/Content/CurrencyMarket.aspx?Node=b3&Id=1742922).

With the US dollar appreciating now, prices are already decreasing as US exports are more expensive resulting in lowered demand for their exports, and thus supply is more abundant, driving the prices down. Indeed, all prices for the 3 commodities have already shown a decrease in their prices, so I am going to bid for short contracts. Since I was not holding any open contracts, I decided to bid for 5 short, 4 short, and 4 short for corn, soybeans and wheat, respectively.

Usually I would only bid for 2 to 3 contracts each time, but since I was out of the markets at that moment, even if I was successful in my bids, the most number of open contracts I would be holding would still only be 5 short for corn. This is not too risky in my opinion, because I still have the flexibility to turnaround and offset immediately should I need to, and also because prices were already decreasing due to the US dollar appreciating. Margin balance at 77,700 at the end of the day.

Thurs. Oct. 27th

I am glad that I have left myself with flexibility to offset my open contracts should I need to because now, I really need to! The futures prices for both soybean and corn are higher because of support from a more positive economy outlook now after the EU debt crisis agreement news (http://www.porknetwork.com/pork-news/latest/Crop-markets-close-strongly-higher-on-Thursday-132729088.html).

On top of this, the U.S. dollar index has fell lower because of they are increasing their money printing, and thus increasing the amount of US dollar supply on the world market. In fact, due to the increased money printing, it has now reached a six-week low due to being overly inflated and is also forcasted to have a downward trend in the short term (http://www.forbes.com/sites/kitconews/2011/10/27/comex-gold-sees-more-solid-price-gains-amid-sharply-lower-u-s-dollar-higher-crude-oil/).

Thus, I have decided to 3 long contracts for corn, 2 long and 1 long for soybeans and wheat, respectively. I do not want to offset all my short positions at the moment yet because there is quite a bit of fluctuality right now, as well as the price of wheat is still steadily increasing. However, I do believe that that I should not hold as many short positions in case the US dollar would have a stronger effect on the commodities’ pricings soon.
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My current margin balance is 67,450. RIght now, I am holding 7 open contracts across the 3 commodities: 2 short, 2 short, and 3 short positions for corn, soybeans and wheat, respectively. For the upcoming trading week, I plan to pay more attention onto the US dollar index movement as I believe the EU debt crisis will have a significant impact on the commodities’ prices.