Week 9: What Went Wrong -it’s the Down Down Down…
Last week, I used technical analysis and identified an inverse head and shoulder pattern on the wheat prices chart which should indicate a trend reversal. I anticipated an upward price trend to follow. I made an order for 3 long contracts on wheat (W2Z) at the beginning of the week and left them there, hoping the wheat prices would go up. However, it was a week about downfalls, the prices of all three crops had gone down overall over the week.
Here’s an overview of my trading in the past week:
| Contract | Position | # | Date in | Price in | Current Price | Gain/Loss |
| W2Z | Long | 3 | Nov 12,12 | 851 | 838 | -$1950 |
| S3F | Long | 2 | Nov 06,12 | 1514 | 1383 | -$13075 |
I carried the soybeans long contracts since the week before, since then the price of soybeans has been falling as well. I have just been hoping that some news might come up (some change in the market) could bring up the soybeans price again. However, the downward trend of soybeans was accelerating upon the news about China cancelling the soybeans import order[1]. For the other crops, the better crop report still seems to be a force pushing down the prices in the past week. The recent news about the “fiscal cliff”[2] seems to be another factor ensuring the downward prices. “fiscal cliff” (the possibility of another recession) is not a news itself but the time of it happening is approaching, it’s normal that traders now have come to worry about it more than before.
The corn prices were up on Friday supported by the news about the US upholding the ethanol mandate[3]. Basically, a lot of corns will continue to go into producing bio fuel in the future. However, the gain of corn here couldn’t make up for the loss over the week. I don’t have any corn contracts at the moment, but I will consider.
In a word, I seem to be stuck with the long contracts on soybeans now… and I still need to offset the long contracts on wheat before I am losing too much on them.
1.Polensek, Tom. (2012, Nov 16). U.S. soy sets five-month low as China scraps orders. Retrieved from http://www.grainews.ca/news/u-s-soy-sets-five-month-low-as-china-scraps-orders/1001863110/
2. Franz-Warkentin, Phil. (2012, Nov 16). Grains, oilseeds seen pulled toward ‘fiscal cliff’. Retrieved from http://www.grainews.ca/news/grains-oilseeds-seen-pulled-toward-fiscal-cliff/1001862502/
3. Rucker, Patrick and Timothy. (2012, Nov 16). U.S. upholds ethanol mandate. Retrieved from http://www.grainews.ca/news/u-s-upholds-ethanol-mandate/1001862517/
Hi Roson this is my first time to comment on your blog
Your blog is beautifully laid out with your technical analysis^_^
Now I am out of market.
For me I have six soybean long contract and other long contracts. My all contracts are liquidated.
You are still in the market! I wish good luck to you!
I expect price for corn and wheat are going up. From the news, corn’s demand remains high, and for wheat its supply is weak.
I hope you could gain profits with your long contracts!
See you in class!