Monthly Archives: September 2013

Week 1 gave me a crash course in futures trading and the tuition was not cheap ($9174). I was kind of discouraged and decided to stay out of the markets for a couple of days. So I continued to hold my corn and soybean from last week (both losing money) without making any transactions until halfway through the week. On Wednesday night, I surprisingly found that there was a sudden jump of commodity prices during the day. I thought there might be a chance for me to get my money back, so I decided to get back in action.

After doing some research, I found that this is all because of something really good happened to wheat, and it consequently leads to an upswing of the whole grain market. The China National Grain and Oils Information Center said in a report that China is likely to import 7.5 MMT of wheat in 2013/14. If realized, it would be the most imports since 1995/96. USDA currently forecasts China’s imports at 9.5 MMT. Wheat futures for delivery in December jumped 1.9 percent to close at $6.705 a bushel at 11:15 a.m. on the Chicago Board of Trade, a four-week high. In addition, the production concerns in Argentina and improved prospects for U.S. exports also contributed to this increase. A frost early in the week could harm Argentina’s wheat crop and reduce the world’s exportable supply.

Although surging wheat prices boosted corn futures, corn also has some good news about itself. In the latest “U.S. Export Sales” report, the USDA shows corn climbing for its third consecutive week to 640,100 metric tons (MT) for 2013/2014, up 46 percent from last week.

So, I bought more corn at $4.55 per bushel on Wednesday night. At the same time, I put a limit sell order at $4.80 to sell all my corns. The corn price fluctuated a lot during the next 2 days (as low as $4.51) and finally got to $4.59 for a brief moment this morning. I think this is my biggest success this week which brought my portfolio % return from -14.42% back to -3.92%. Here is my trade and portfolio summary for this week:

I have learned two lessons this week:

1. Don’t just read North America news, international news also play an important role in predicting the market’s movement.
2. I got this one from Mark: Macro is really tough to call, so when lots of macro events are happening, just stay out of the markets. If you manage to keep your wits (don’t be emotional), you will see great opportunity.

I will keep an eye on the release of the USDA’s next Grain Stocks reports on Monday, September 30^th. This will definitely cause another round of predictions, fluctuations, frustrations, and etc.

Here is a new website I found this week, hope it’s useful: http://agfax.com/

Looking forward to round 3.

Impulsion is devil. I went long on a December 2013 contract of corn at $4.59 per bushel on September 18^th. The next morning I found that I have earned about $2000 (2% return) and the price started to drop, so I swiftly sold to close at $4.63. At that moment, I really thought I was already a pro at futures trading but things began to go south. After I sold my corn, I noticed that soybeans price has dropped sharply and it was close to the 5-day low ($13.47). So I bought some soybean and nearly fell off my chair when I checked the price again during noon ($13.32). I became a desperate gambler and all I had in mind is to earn my money back. I bought corn again impulsively due to a sharp decrease in price ($4.57). Today, I bought more soybeans at $13.17 in hopes of decreasing my average soybean bid price. The closing prices of corn and soybeans were $4.51 and $13.17 respectively. As a result, I have suffered a loss of $9,174 this week and my ending portfolio value is $90,826. Here is my sad Trade and Portfolio Summary (1st Week)

Ok, I admit it that I messed up in the first week of trading. I didn’t know what to do and I didn’t invest the time and effort to learn what I should do. I thought futures trading is quite similar to gambling, so I utilized my experience in Vegas but things didn’t work out quite as I expected. Therefore, I came to the conclusion that there must be some differences between trading and gambling.

Success is not final, failure is not fatal. After some research work, I have several reasons that caused my temporary victory and the terrible defeat later. First, an economy still stumbling toward recovery was not enough to sway the Federal Reserve, which defied market expectations Wednesday and said it will not begin pulling back on its monthly asset-purchasing program. The release of this Federal Open Market Committee statement at 2:00 PM EST on September 18^th contributed to the rapid increase of corn prices in the next two days.  So I accidentally made the right choice to buy corn on Wednesday.

Today, after I bought about $30,000 of soybeans, soybean futures dropped to the lowest in four weeks, why? Simply because of the speculation that U.S. yield potential may improve after recent rains and a reduced threat of freezing temperatures. In addition, the USDA Crop Production Report released on September 12 also continues to depress the corn price.

Trading is all about information. If I did my research beforehand, I believe that my portfolio summary would look a lot better. Next week, I will set a stop price for my corn and soybean to limit my loss and I will definitely do some market research and analysis before I make any move. No more Vegas!

Here is some information sources I’m finding useful:

http://www.federalreserve.gov/newsevents/

http://www.agprofessional.com/

http://cornandsoybeandigest.com/