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Sep 30 / Roson

Week2 – What Went Wrong with far futures

On Monday, I placed orders in the market with a short contract of Nov 2012 soybeans and a long contract of May 2013 soybeans. They didn’t get processed until Tuesday and I left them till the end of Friday. I thought the Nov 12 soybeans price would go down because there had been news about unexpected good harvest of soybeans; with better than expected production/ supply of soybeans,the futures prices of them should be going down. On the other hand,  there was the news  that China [1], the largest soybeans importer from US, would continue selling its soybeans reserves well into 2013 to contain its inflation domestically. I suspect this news would cause the near soybeans futures prices to go down and the far futures prices to go up, with the expectation of a lower level of export demand in the near future and (at least) back to normal export demand in the far future.  Altogether, I made the decision to have a short position for Nov 2012 soybeans and a long position for May 2013 soybeans.

A week went by, the soybeans futures prices went down and back up to the prices level that’s still lower than my prices in.  I made a gain of about $250 (my gain from a short on Nov 2012 less my loss from a long on May 2013 soybeans).  The re-bound on Friday (Sept. 28) was probably a result of the release of USDA Grain Stocks report where it stated that the soybeans stocks was down 28 percent [2].  In fact, the corn and wheat futures prices had a large rebound on Friday as well after the plunges earlier.  The prices of a few corn near futures even hit a daily limit up.

My “prediction” of the far futures of soybeans was not correct or the one was just not enough/sufficient information for a great impact on the far futures.  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.


1. Reuters Africa. (2012, Sept.21).  GRAINS-Soybeans edge up, but remain on track for biggest weekly fall in a year.  Retrieved from

2.USDA. (2012, Sept. 28). Grain Stocks. Retrieved from


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  1. mikeniu / Sep 30 2012

    Hi Roson,

    Before I give “constructive criticism
    and unique ideas”,I’d like to say that I really admire the strongly logical structure you used in writting.Your clear description makes your whole trading process quite easily understood by others.One more thing I want to point out is that you’ve done a very good job in the “reference” part.Unlike others,you add footnotes to your post,which not only makes your article more professional and trustworthy,but also helps people to follow your thinking process more easily.

    Next is the “criticism” session. I cannot agree with you on your “far futures”analysis.Yes,the less soybeans import by China definitely will have a impact on the near soybeans futures market.And that’s the end of the story.It is inessential for far futures price to go up.That’s right that future demand in China will at least back to normal.But this will not happen unless soybeans supply in 2013 is looser.In other words,China will import more only if other countries produced more.If world’s supply increases,it’s not likely that soybeans price will go up.

    So I think you overanalyzed this China thing.Perhaps trying to consider it more straightforwardly would have helped you gain more money.

    Just a little suggestion.Welcome your comments:)

    Good luck!


  2. Roson / Sep 30 2012

    Hi Mike, Thanks for your comment! I agree with your opinion on the loose link between the China’s import of soybeans and the far futures prices.. I did think so too that’s not a sufficient piece of information to affect the far futures price. I put that in my last paragraph. =] Your explanation is even more in depth. haha thanks!

  3. taishi / Oct 1 2012

    so basically you short on Nov 2012 and long on May 2013 since China will continue to sell its soybeans reserves till May 2013? But I suppose that the price differences between Nov 2012 and May 2013 are just the storage cost unless there is a stock out in between. how do u know there is a stock out??

  4. Roson / Oct 2 2012

    Hi Tai, I didn’t know there’s gonna be a stock out. Based on that news about China’s selling its soybeans reserves well into 2013, I just supposed there would be expected increase in demand for the US soybeans after China stop selling it’s own reserves and started to import more soybeans.. but seems like this information is not sufficient to support a price increase in that far future and..(also, when would China stop selling its reserves in 2013 was not stated either.. ) overall, my judgement was not backed by strong evident and the price didn’t increase for May 2013 soybeans after that piece of news was released.

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