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_/