This week, I have learned quite a few lessons:<\/p>\n
The corn, wheat, soybeans futures went high up last Friday after the release of the USDA quarterly Grain Stocks report. \u00a0I expected that wheat and soybeans prices would at least go up for another day (ie. Monday), simply based on the lower than expected stocks reported and the fact that a few of corn\u00a0futures\u00a0went limit up while wheat and soybeans futures didn’t. \u00a0I was not 100% sure about my\u00a0expectation\/intuition but I still went ahead and placed orders\u00a0to offset all my soybeans contracts (1 short on Nov 2012, 1 long on May 2013) and ordered 1 long on Nov 2012 soybeans and 1 long on May 2012 (at a lower price than the price-in of the long contract I just offset). \u00a0I also ordered 1 long on Dec 2012 wheat. \u00a0I placed the orders over the weekend so they got in when the market opened again on Monday.<\/p>\n
I didn’t get to pay attention to the news or prices until late on Monday, only to find out all wheat and soybeans futures prices fell that day, corn futures continued to rise. It turned out to be totally opposite to my expectation. \u00a0 From my prices in, there was about 7 cents fall for the Dec 2012 wheat, 13 cents fall for the Nov 2012 soybeans and 10 cents fall for the May 2013 soybeans. I lost about $1500 on Monday. \u00a0I saw on the news that the slow export demand and rain forecast in the drought areas expected to boost the winter wheat seeding which were probably the reasons driving down the wheat futures prices. As for soybeans, it seems that the soybeans futures prices (became weak) went down with the downward prices of palm oil (substitute to soybean oil)[1]<\/sup><\/a> . I didn’t think much and just kept my contracts there. \u00a0Their prices continued to fall on Tuesday and fell to quite low points which increased my loss to about $5000. I know the news was still about the rain and it’s possible the prices would still go down. However, I really don’t want to offset my contracts and realize such a big loss. \u00a0I decided to keep my long contracts and, on the other hand, ordered 2 short contracts on Jan 2013 soybeans, in the hope of gaining something back (in a short term: 1-2 days) while waiting for the overall prices to go back up (in a long term).<\/p>\n I initially wanted to place 20 short contracts on Jan 2013 instead of 2 to “compensate for the loss” (with a big IF, if the price would continue to fall). \u00a0I am glad I didn’t do that because the soybeans futures prices actually went up a bit on Wednesday and went up quite a bit on Thursday due to\u00a0unexpected\u00a0low yield of Canada’s canola crop (substitute)[2]<\/sup><\/a>. \u00a0 I\u00a0regretted\u00a0my decision and placed to offset the 2 short soybeans contracts which came through on Friday with a realized loss of $2151. \u00a0I think I really need to regroup and straighten out my thoughts before I make any future moves. Therefore, I am still keeping the long contracts: 1 long on Dec 2012 wheat, 1 long on Nov 2012 soybeans and 1 long on May 2013 soybeans with an unrealized loss of about $4000.<\/p>\n My conclusion is no more hasty decision or neglection is allowed!<\/p>\n <\/p>\n <\/p>\n <\/a>References:
\n1. Naeem, Asad. (2012, Oct. 1). EU wheat follows falling US futures after sharp rally<\/em>.\u00a0\u00a0Retrieved from\u00a0http:\/\/www.brecorder.com\/markets\/commodities\/america\/82883-eu-wheat-follows-falling-us-futures-after-sharp-rally-.html<\/a><\/p>\n