Hi,dear classmates! I’ve got three more webs for you!

1.CME Group.http://www.cmegroup.com/

The biggest advantage I found about this web is that you can have up-to-date data of any commodity you want.You can also easily convert data into various charts on it, so that you get a more clear view of what happened.

2.USDA Official Website. http://www.usda.gov/wps/portal/usda/usdahome

Nothing is more valuable than first-hand documents. From here, you can get details in dynamics of US commodities though USDA official reports,which are all big “movers” in the commodity futures market!

3.Live Trading News

http://www.livetradingnews.com/category/comodities/agriculture/soybeans

One thing you will benefit from this web is that it is good at giving you the outlook of the whole current commodity market, which is very important when doing correlation analysis.

Good Luck!

Well,since the USDA stock report had been released this week,there will not be another “bomb” from USDA next week. So, technically,the commodity futures market next week should be less volatile.

My intuition tells me the downward market trend will continue, because the low stock level not only reflects the current high demand but also indicates that stockholders lack confidence in next-year’s price .Besides,I don’t believe traders’ previous expectation will switch such easily in such a short time zone. Aslo,I expect good news from Latin America. So, my conclusion is that the prices of Corn and Soybeans will go down in general before any new USDA report is released.

Based on my analysis,I’ll take steps below:

1. Keep holding short on Mar.2013 Soybeans(S3H).

2.Take another four short positions on Mar.2013 Soybeans(S3H)

3. Take five short positions on Dec.2012 Corn(C2Z)

I am looking forward to sitting on the top of the hill stacked by money!

1. Result

(1) I got a realized loss of $1363.50 by offseting the Dec. Corn(C2Z).(Price in:768.25;Price out:741.00;)

(2) I gained $400 this week by taking one short on Soybeans.(price in:1572.25;last trading day’s price:1564.25)

Final Equity last week:$39000.50;  Final Equity this week: $39036.80

Final gains this week:$36.30

2.What Went Right

(1)Went short to offset Dec. Corn(C2Z)–Right

I went short to offset my contract immediately after C2Z price decreased from 748.25 to 744.75 on Thuesday,which proves a very smart move,for the next few days experieced a dramatic fall in C2Z price,digging at 705.00.

The main reason for this drastic drop may be the announcement of  underestimate of corn production addressed by USDA previously.

But the C2Z price bounced on Friday, locking up the limit up at 756.20,which was caused by a new release of the USDA crop stock report on Friday. It seemed like traders had overestimated the stock level.So the corn price soared on Friday.

(2) Went a short on Mar.2013 Soybeans(S3H) –Right

I did this for the same reason as I shorted on Corn.I anticipated a downward trend for Soybeans due to the USDA annoucement of underestimated production. And there it went. The price were down to 1524 on Thurday.While on Friday,because of the surprising stock report,it turned back to 1564.

3. Brief Comment

To sum up, I’m basically satisfied with the trading result this week.There is no doubt that USDA’s stock report caught most traders,including me,off guard .But,after all,that’s something for which you should not blame yourself.

References

http://www.agweb.com/article/stocks_report_delivers_september_surprise/

http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/corn.html

http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1079

I recommend Three websites for all of you.

1. http://www.agweb.com/

This is a website powered by Farm Journal. A variety of daily agricultural news are posted on it. The best thing of this web ,I think, is you can find news of a certain commodity under its own catagory. After you choose a certain commodity, the web system will filter off news and comments of other commodities,solely showing you the information you want to see.

2. http://www.library.ubc.ca/

This website belongs to UBC library. The unique advantage of it is that you can find almost any theories and principles of Futures on it in details by just enter the key words and then click “search”.Many books are open to online reading!

3. http://online.recoveryversion.org/index1.asp

Yes,it’s the Bible online-reading. A Christian recomended me the web, saying this version had a lot of footnotes that can help me understand some of the bible. I haven’t read it yet, but I definitely will.

I’ve hold an opinion for a long time:  Most of the time(like when you are in Futures or Stock market), being honest and refraining yourself is much more important than being too confident and trying to control the whole situation based on the limited information you have. Afterall,what you know is far less than what you don’t know. So, being humble and relax,let God works in his mysterious way.

1. Bide My Time to Offset Corn(C2Z)

In spite of losing $1000 this week for my long position on C2Z,I decide to keep holding it long next week. As I mentioned at the end of “What Went Wrong” post, I interpret the price turning around in the last few days of this week as a signal that the affection of drought on corn production hasn’t past and the demand from biofuels, livestock industries and other sources for corn still stays high.

Meanwhile,I noticed a piece of news from the website that Gulsana suggested saying that US farmers raised corn and soybean sowings even further than officials have revealed. According to the news, the influential analysis group pegged corn sowings for the ongoing harvest at 97.172m acres, up more than 750m acres on the current US Department of Agriculture estimate, which hits the 77-year top. So I hold the view that there might be more supply of corn than originally expected in the coming monthes.

Based on the analysis in two sides above,I’ll hold the long position and bide my time.Once the price goes down,I’ll offset this contrct immediately, otherwise, I’ll choose to keep holding it .

2. Take Short on Soybean

I made my decision to take short on soybean after I heard that dry conditions in Brazil’s soybean growing region are expected to allow planting there to progress at a rapid pace. News said that a total of 140 million tons of soybeans are expected to be produced in Brazil, which is a more than 30% increment from last year’s drought-ravaged crops. Accroding to the “First week up and down with Soybean futures – What Went Right?” post in Roson’s blog,I got the information that Brizil is one of the major soybean producers in the world(occupying 25% of world production) and soybeans in Brazil are planted in mid-August through mid-December and harvested during February to May. So I anticipate a huge tons of soybeans are on thier way of being planted.

In addition,the “US farmers raised sowings” news mentioned above makes me further believe that future supply of soybeans will soar, pushing me to set up my mind to take short on soybean.

Hope money rolls in!

References:

http://www.agweb.com/article/soybean_price_declines_could_continue_for_awhile/

https://blogs.ubc.ca/gulsana/2012/09/21/cool-source-of-information/

http://www.agrimoney.com/news/corn-sowings-to-hit-77-year-top-soybeans-a-record–5019.html

https://blogs.ubc.ca/rosonluo/2012/09/23/first-week-up-and-down-with-soybean-futures-what-went-right/

1. Result:Lost $1000

I took a long position on C2Z on Sep.12th, when price was 768.25,and I’ve been holding this position tile now,incurring a loss of $1000 by calculation according to the current C2Z price(748.25):   (7.4825-7.6825)*5000= – $1000.

2. What Went Wrong

The reason why I went long on C2Z was that I expected a big shortfall in corn production due to the worst drought in 50 years in US. Things went great at the beginning.I gained $687.5 from price increase on Sep.13th. But on Sep.14th,the price of C2Z plummeted from 782.00 to 748.00 , following USDA released its September World Agricultural Supply and Demand Estimates and Crop Production reports ,estimating that corn production was forecast at 10.7 billion bushels, down less than 1% from the Aug. forecast.

I consider the USDA report the main driver of the price decrease,because traders have expected a new dramatic drop in production forecast in Sep.compared to that in Aug.,not just a less than 1% down,based on the current strong demand and the severe drought.

Fortunately,C2Z price turned around in the last few days of the week after dipped,although still volatile.I interpret it as a signal that drought affection on corn is far from over.

References:

http://www.agweb.com/article/feed_demand_for_corn_deteriorating/

http://www.agweb.com/article/have_corn_bean_prices_reached_new_plateaus_/

Question: Why the creation of the Gateway pipeline will raise the price of crude oil for Canadian refineries.(#  http://www.cbc.ca/asithappens/episode/2012/09/04/the-tuesday-edition-45/#)

Response

In large probability,the creation of the Northern Gateway pipeline is going to rase the price of crude oil for Canadian refineries,based on the following reasons:

First,the main reason for Canadian government and the oil companies to build the pipeline is that exporting oil to Asia can produce big profit for Canada due to the “Asian Premium”,which means the price of each barrel of oil sold to Asia is a bit little higher than that in North America. So in order to garantee profit, the gevernment and the oil companies will make the best endeavor to secure this premium.By doing this, it will effectively raise Canadian oil price.

Second,the amount of oil produced during a certain period is relately fixed.Exporting oil to Asia will reduce Canadian local oil supply.As long as the Canadian demand for oil is not apparently goes down,the equillibrium price of oil will definetely increase.

Third,the Canadian demand for oil may increase.According to a statistics,the construction of Northern Gateway pipeline will need 6-billion ribbon of steel in total,which will push the oil price up.

Reference:

1.http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/northern-gateway-pipeline-could-raise-the-price-of-gasoline/article4522968/

2.http://thetyee.ca/News/2012/02/02/Northern-Gateway-Inflationary-Threat/

3.http://www.cbc.ca/asithappens/episode/2012/09/04/the-tuesday-edition-45/#

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