{"id":70,"date":"2012-09-30T09:26:34","date_gmt":"2012-09-30T16:26:34","guid":{"rendered":"https:\/\/blogs.ubc.ca\/rosonluo\/?p=70"},"modified":"2012-09-30T09:28:24","modified_gmt":"2012-09-30T16:28:24","slug":"week2-what-went-wrong","status":"publish","type":"post","link":"https:\/\/blogs.ubc.ca\/rosonluo\/2012\/09\/30\/week2-what-went-wrong\/","title":{"rendered":"Week2 &#8211; What Went Wrong with far futures"},"content":{"rendered":"<p>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&#8217;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\u00a0production\/\u00a0supply of soybeans,the futures prices of them should be going down. On the other hand, \u00a0there was the news \u00a0that China <a href=\"#ref\"><sup>[1]<\/sup><\/a>, 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. \u00a0Altogether, I made the decision to have a short position for Nov 2012 soybeans and a long position for May 2013 soybeans.<\/p>\n<p>A week went by, the soybeans futures prices went down and back up to the prices level that&#8217;s still lower than my prices in. \u00a0I made a gain of about $250 (my gain from a short on Nov 2012 less my loss from a long on May 2013 soybeans). \u00a0The 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 <a href=\"#ref\"><sup>[2]<\/sup><\/a>. \u00a0In fact, the corn and wheat futures prices had a large\u00a0rebound on Friday as well after the plunges earlier. \u00a0The prices of a few corn near futures even hit a daily limit up.<\/p>\n<p>My &#8220;prediction&#8221; 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. \u00a0However, 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.<\/p>\n<p>&nbsp;<\/p>\n<p><a name=\"ref\">References:<\/a><br \/>\n1. Reuters Africa. (2012, Sept.21). \u00a0<em>GRAINS-Soybeans edge up, but remain on track for biggest weekly fall in a year. \u00a0<\/em>Retrieved from <a href=\"http:\/\/af.reuters.com\/article\/commoditiesNews\/idAFL4E8KL04Z20120921\">http:\/\/af.reuters.com\/article\/commoditiesNews\/idAFL4E8KL04Z20120921<\/a><\/p>\n<p>2.USDA. (2012, Sept. 28). <em>Grain Stocks.<\/em> Retrieved from \u00a0<a href=\"http:\/\/usda01.library.cornell.edu\/usda\/current\/GraiStoc\/GraiStoc-09-28-2012.txt\">http:\/\/usda01.library.cornell.edu\/usda\/current\/GraiStoc\/GraiStoc-09-28-2012.txt<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>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&#8217;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 [&hellip;]<\/p>\n","protected":false},"author":14442,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[593792,568639],"tags":[],"class_list":["post-70","post","type-post","status-publish","format-standard","hentry","category-trading-game","category-what-went-rightwrong"],"_links":{"self":[{"href":"https:\/\/blogs.ubc.ca\/rosonluo\/wp-json\/wp\/v2\/posts\/70","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.ubc.ca\/rosonluo\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.ubc.ca\/rosonluo\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.ubc.ca\/rosonluo\/wp-json\/wp\/v2\/users\/14442"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.ubc.ca\/rosonluo\/wp-json\/wp\/v2\/comments?post=70"}],"version-history":[{"count":3,"href":"https:\/\/blogs.ubc.ca\/rosonluo\/wp-json\/wp\/v2\/posts\/70\/revisions"}],"predecessor-version":[{"id":73,"href":"https:\/\/blogs.ubc.ca\/rosonluo\/wp-json\/wp\/v2\/posts\/70\/revisions\/73"}],"wp:attachment":[{"href":"https:\/\/blogs.ubc.ca\/rosonluo\/wp-json\/wp\/v2\/media?parent=70"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.ubc.ca\/rosonluo\/wp-json\/wp\/v2\/categories?post=70"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.ubc.ca\/rosonluo\/wp-json\/wp\/v2\/tags?post=70"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}