The Road Ahead with 3 crops
I knew that wheat and corn futures prices fell quite a bit last week before Friday. I was planning to went in the wheat or corn futures market and take a long position at their low prices. After I decided to do that and before I manage to do so, the corn and wheat futures prices already jumped a sky high on Friday morning. I started to doubt whether I should still go in the market and what position I should take. I remember there were news about some kinda of report to be released on Friday, but I wasn’t sure what it was about. Thanks to fellow student, classmate Ishrat’s tweet (@ishrat_gadhok)[1], I found out that USDA released the quarterly Grain Stocks report about the stocks of corn, wheat, soybeans having gone down[2]. The futures prices of corn, wheat, soybeans all went up at the result of that, expecting shrinking supplies of all 3 crops.
I expect the soybeans futures prices to go higher so I have placed orders to offset my short contract and go long. I also ordered to offset my long contract because its price now is still lower than my price in when I purchased my contract last week. I placed a long contract again to get in at a lower price hoping to make a bigger profit when the price indeed goes up. Soybeans can be substitute to corn. Since corn futures prices have already gone high up and soybeans haven’t yet, there should be more room for the soybeans futures prices to rise.
I expect the corn and wheat futures prices to continue to go up but I am not sure how long that will sustain. I will go ahead with a long position in both of corn and wheat futures and pay close attention to the news closely.
1. @ishrat_gadhok. (2012, Sept. 28). Tweeter. Retrieved from https://twitter.com/ishrat_gadhok
2. USDA. (2012, Sept. 28). Grain Stocks. Retrieved from http://usda01.library.cornell.edu/usda/current/GraiStoc/GraiStoc-09-28-2012.txt
Hi Roson!
Today is my first time visiting your blog, but
you know what your blog is really good!!
Well-organized, neat and easy to understand!!
The point you made in your blog,
“However, the daily news that affect the spot prices are really impacting the futures prices as well for the link between the spot price and futures price is strong, the closer the stronger”
is really good because you clearly showed the link between spot and future price. You also let people know the impacts of daily news and USDA report on future prices.
In my opinion, the wheat prices will probably go up next week becacause corn prices already hit the limit up price. People will prefer to buy the cheaper substitute which is wheat other than corn.
Overall, I think you did really good job on this
and I hope that you will do even better next week! See you on monday!!
Thank you Cindy. I have been longing to something in the corn / wheat market. It’s my time to do so this week. =P I long for wheat! I made a long position of wheat contract. Let’s have even more fun with the crops / commodity! =P
Your blog is very well written. Had I been paying attention to the news and checking out twitter more often, I would have avoid taking so much loss from the limit-up!
Good call that you’re longing on corn and wheat. I’ve just switched in from short. Now let’s pray that prices will continue to go up.
Thanks Vicki. Seems like this week weather has been playing a bigger role. ..the price’s been falling..
Good job on clear explanation. Enjoyed reading.