Recap of Last Week’s Open Contracts
I was holding 2 long contracts for corn, 6 short contracts and 4 short contracts for soybeans and wheat, respectively. As prices for all these 3 commodities have fallen dramatically in the last while, predictions are that they would rebound soon. The question was really when.
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Oct. 3rd Monday
Corn production has increased due to weather, and price plunges to their lowest price in 10 months -> Price is dropping further, so I am going to take on short position by offsetting my 2 long contracts. However, I will do this cautiously to leave myself with some flexibility should the price starts to rally. I decided to bid for 5 short contracts because if I offset my 2 long contracts, I would hold 3 short contracts. This would then allow me to observe the market but still have the flexibility to offset immediately should I need to.

Wheat and Soybeans -> Prices for both commodities are reported to be dropping due to decreased demand and increased supply. Dry weather this season has  been a boost to wheat  production. Technical analysis also suggested the prices are looking bearish. With these factors in play, I decided to bid for 3 short contracts each in soybeans and wheat. Ended up Losing profit of 1560 (but that’s totally fine, as I am trying to reason out my bid decisions from research and discussions; not trying to gamble to earn big!) with a margin balance at 78,090 now.

Oct 5th Wednesday
Since my previous bids were successful, I was still holding the same number of open contracts. The corn prices are fluctuating a bit, and it was difficult to predict whether it has reached its bottom yet, so I decided to get out from the corn market by offsetting 2 long contracts through bidding for 2 short contracts. I decided to take 2 long soybeans contracts as reports are also speculating that price of soybeans may be at its bottom as well and expected to increase.

Supply of wheat is expected to be above its forcased production. However, because its price has been decreasing, I did not predict that it would continue to decrease. I decided to take 1 short contract to leave myself with sufficient flexibility to offset should the price starts to rally. Margin balance at 80,530 by the end of the day.

Oct 6th Thursday
Prices for all commodities increased. I was still unsuccessful in offsetting my short contracts for soybeans and wheat. Thus, I was more determined this time to offset  short contracts in case the prices do go up. As there was confusion among traders whether prices have hit their bottoms yet, I bid cautiously instead of aggressively as I did not have much confidence in how dramatic the prices would actually change. So, I took 3 long positions to get back into the corn market, and 3 long positions each for soybeans and wheat to offset some of my short futures contracts. Margin balance that day was 81,310.

Oct 7th Friday
Production of corn  expected to decrease in yields due to rainfall, so I predict that the futures price would rise for corn. However, rainfall would help with the wheat germination and thus, raise its supply, but I also read news that rainfall could be a double-edged sword for wheat because farmers will have difficulty harvesting the wheat due to the heavy rainfall after the prolonged dryness. Soybeans production has increased, but rainfall may cause damage to some of the supply. Because of uncertainty, I decided to take 1 long position for each of the 3 commodities since I predict that prices would increase.  ______________________________________________________
My current margin balance is 82,760. At this moment, I am holding 1 long contract for corn, 2 short contracts for soybeans and 1 short contract for wheat. I’m going to observe the market and am planning to offset the remaining open short contracts that I’m holding by taking long positions if the prices rally next week. If the outlook is going to be bearish, I am planning to offset my long position in the corn market.

REFERENCES
FRE 501 Twitter
FRE 501 WIKI  http://wiki.ubc.ca/Course_talk:FRE501
News Articles:
Corn/Wheat Production http://www.agrimoney.com/news/grain-prices-dip-after-us-finds-extra-corn-stash–3665.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+WorldcropsRSS+%28WorldCrops+RSS%29&utm_content=Google+Reader

Recap of last week’s holdings
I was holding short contracts for all 3 commodities last week because prices fell quite dramatically. (Ex. I was holding 9 short contracts for wheat and 11 short contracts for soybeans!) A few of my colleagues have cautioned me against this as it is challenging to accurately predict the market’s movement, thus probably impractical to hold too many short contracts in the long run–> subjecting myself to too many risks should the market turn around.
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As Bernanke announced that no additional dollar printing will occur now in the US, there will then be a limited supply leading to appreciation and lowering prices of commodities. The US dollar has strengthened to its highest value in 11 months. However, this could possilby create psychological barriers amongst traders in US dollar investments as it has been depreciating steadily this year. I predicted that the prices of commodities would rebound a bit since they have fallen in prices over the last week, and traders are taking more caution towards the US dollar appreciating.

Although corn production has increased to 16 tonnes in Ukraine, it was originally estimated to be over 18 tonnes this harvest. News also reported that traders are believeing that the corn market is oversold. From the technical analysis p.o.v, the corn market looks bearish in the short-term, but with news that global demand for corn is expected to be increasing, I predicted that it would lean towards the bullish side on the long-run. All these factors, on top of my intention to offset some of my short contracts, I decided to take a long position on 5 contracts for corn.
Corn -> 5 long contracts @ 645cents (592.4-645)*5*50 = -13150

It is believed that soybeans have been oversold last week due to their rapid fallen prices. Reports state that the production of soybeans in this harvest period has been lower than what they had expected. From the technical analysis view, prices are fluctuating quite a bit with soybeans prices and since I am holding 11 short contracts, I have decided to attempt in offsetting some of my contracts to reduce my risks.Soybeans 5 long contracts @ 1252 (1179-1252) *5*50 = -18250.

Dry weather has been a setback for wheat crops, affecting 80% of winter grain production. Moreover, the lack of humidity on the soil’s surface is increasing the concerns of sowing for farmers. With predictions on our WIKI blog that wheat prices may go up, and with my holdings of 9 short contracts, I decided to try offsetting some by taking a long position with 5 contracts.Wheat 5 long contracts @ 650 (609.2-650)*5*50 = -10200; 
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My margin balance is currently 79650. I am holding  2 long contracts for corn, 6 short contracts and 4 short contracts for soybeans and wheat, respectively. As news today reported that the corn prices have fallen again, and the outlook is extremely bearish according to technical analysis, I am planning on offsetting my long contracts for corn next week.

REFERENCES
FRE 501 Twitter
FRE 501 WIKI  http://wiki.ubc.ca/Course_talk:FRE501
News Articles:
Effects of Weather on Corn/Wheat http://www.agrimoney.com/news/ukraine-weather-weighs-in-on-side-of-corn-vs-wheat–3638.html

PS. I have also learned that I should not freak out over the number of short contracts that I was holding. I should trust my research and decide on which factors would affect the price movement the most significantly, and then place my bid accordingly. If the price is, say going to decrease, then the more short contracts under my belt, the more profitable I will be. Afterall, taking sensible risks is what bidding is about!

For Sept. 20th Tuesday

Investors are favouring the US dollar over fears of the Euro Debt. Thus, US dollar is strengthening and I predict that the prices of commodities are going to lower. However, rumours have that China is going to demand a significant amount of corn from the US. This would decrease the supply of corn, and I predict that the price would then be forcasted to increase.

Since corn is going to increase in price, I will bid for a long position on 5 contracts at 690 cents. So if price does go up in the future, I would be able to profit from selling it at a higher price than now. However, for the remaining 2 crops, I am going to hold 5 short contracts each because I predict that the prices would continue to decrease. If it does indeed decrease in the future, then I would still be able to sell it at the higher price that I am bidding at right now.
Profit: Corn -> 5 long contracts @ 690cents (690.2-690)*5*50 = 50; Wheat 5 short contracts @ 671 (671-674.6)*5*50 = -900; Soybeans 5 short contracts @ 1335 (1335-1338) *5*50 = -750.

For Sept 21 Wednesday

Between these couple days, the US dollar has been experiencing slight fluctuations (although it is increasing in value overall)  as some claim it to be a safe haven and others don’t. Thus, I decided to observe the different factors for a little longer before jumping into the bids again. However, a news article reported that soybean production is up 16% from 2010, as well as technical analysis also shows the trend to be extremely bearish, so I decided to bid 3 short contracts. Profit: soybeans 3 short contracts @ 1340, (1340-1345.2)*3*50 = -780.

For Sept. 23 Friday

The US dollar continues to strengthen, driving commodity prices even lower. In fact, soybeans in particular is reported in the news to reach the lowest drop in 2 years because of recession fears building up. However, wheat prices are seen to be fluctuating quite a bit and not decreasing as much on the technical analysis side. However, it is still forcasted to be decreasing, but just may not be as rapid as the other 2 commodities. So, I decided to take 5 short positions each for corn and soybeans, and 2 for wheat.
Profit: Corn 5 short contracts @ 653, (653-638.4)*5*50=3650; Soybeans 5 short contracts @ 1267, (1267-1258)*5)50= 2250; Wheat 2 short contracts @ 640, (640-640.6)*2*50= -60
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Currently, I am holding 3, 11, and 9 short contracts for corn, soybeans and wheat, respectively. I am earning money in the game as my margin balance is now 1132700. So far, I have made 1107700. I am going to hold my positions and observe the market movement, and then take action as to what I will do next.

References
FRE 501 Twitter
FRE 501 WIKI  http://wiki.ubc.ca/Course_talk:FRE501
News articles :
Corn/Soybeans Futures fall, Wheat rises http://www.washingtonpost.com/business/markets/corn-oat-and-soybean-futures-fall-but-wheat-futures-rise-on-the-cbot-livestock-prices-rise/2011/09/23/gIQAH1r9qK_story.html

According to the findings posted on WIKI-blog, I have deduced the expectations that prices of commodities would rise. Dry weather in the US that has severely damaged crops in the past month, depreciating US dollar over the past while, decreased yield in crop production are all factors that may most likely contribute to the increase in commodity prices.

However, from Twitter announcements as well as agriculture articles, prices cannot increase in just overnight’s time – there would be a period where they adjust into the upward trend. So, I have decided to take advantage of this incubation period in taking long positions on my bids before prices start to rise.

Sept. 14th
Corn: took a long position for 2 contracts, bidding 710. Unsuccessful as the lowest price reached that day was 716.4

Wheat: long position for 2 contracts, bidding 688. Again, too low of an estimate as the market dipped till only 698.

Soybean – decided to observe a bit more as I read updates on a sudden increase in supply due to the occurance of a heavy rainfall in the US.
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Unfortunately, I estimated the prices to be lower than it really became, so I was unsuccessful in taking a long position to enter the market. I studied up on the trends of the pricing from the past few months, with aid from the findings of our technical analysis group. I decided to bid again on Wednesday.

Sept 15
Corn: took a long position with 2 contracts at a bid of 715. Loss of profit that day as I bought it at a more expensive price – it reached a low of 700.2.

Soybean: I concluded from all my readings and research that soybean production is going to increase because of an unexpected heavy rainfall in the US, and thus the price of soybeans would decrease. I bid for 2 long contracts at 1375, and had a loss of profit that day as it dipped even lower to 1356.4.

Wheat: From diagrams and data that illustrated the trend of wheat prices, I expected that the price would rise. I then took a short position for  2 contracts at 702. However, the highest price that it reached that day was 705.6, so I underestimated the peak to be a little lower that day.
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As of this moment, I am holding long positions with 2 contracts each on corn and soybean at bids of 715 and 1375, respectively. I am also holding a short position on wheat with 2 contracts at 702. Currently, I am losing money in the game as my margin balance is now 22120. I have lost so far, 2880. So before I make any more decisions, I am going to hold my positions and observe the market movement, and then take action as to what I will do next.

References
http://www.publicopiniononline.com/ci_18849145?source=most_viewed
UBC Wikiblog FRE 501 Course
http://wiki.ubc.ca/Course_talk:FRE501
Twitter FRE 501 Postings