The following chart is a summary of my performance of this trading semester.

I am such a risk averse person that I don’t dare to trade many contracts even if I am not playing with real money here. Generally, I trade 1-2 contracts per week. And seeing my positive gains, my cautiousness might not be a bad thing after all.

I learned a lot in this trading game we had. This is my first contact with commodity future market. At least, I’ve got to know where to search interesting articles and how to make price predictions accordingly. In addition, psychologically, the fear and strangeness I had in the beginning turned into fun and joy at last. To sum up, I had this sense of achievement in the trading game, even if the profits I’ve made is not real! :)) I am glad we were brought into this game :))

As I put much of my interest in Canadian market this week, I found some domestic website for information as well.

1. Grainews. http://www.grainews.ca/

This is a great site for our interest on what is happening in Canada. Some articles are regional while some are nation-wide.

2. Winnipeg Commodity Exchange. http://exchanges.barchart.com/intra/wpg/.

The Winnipeg Commodity Exchange is the former name of a derivatives market based in Winnipeg, Manitoba, Canada now known as ICE Futures Canada. This is of a really small version, with only two commodities(canola and barley) available.

This week, I observed some commodity news regarding Canada, which I found pretty interesting. Rogers, Canada’s biggest refined sugar group, said that its overall volumes in the year to the end of September fell 1.2% to 641,573 tonnes, undermined by the loss of some key contracts late in 2011 and a switch abroad by some customers of food manufacture.

The drop in sugar prices, against strong grain markets, has prompted some reversal in the switch by food and drinks groups towards corn-based sweeteners, Rogers Sugar said, foreseeing the potential for a further increase ahead.

High-fructose corn syrup (HFCS) as it literally shows, are exacted from corns. This news break out are basically forecasting potential increase in corn prices.

As shown in the graph, in this past trading week, corn price indeed increased.

References:

1. Sugar syrup ‘regaining ground’ against HFCS.  <http://www.agrimoney.com/news/sugar-syrup-regaining-ground-against-hfcs–5249.html >

2. http://www.plus500.com/Instruments/ZC?searchInst=corn

In this trading week, I didn’t  trade any new contracts but offset these following contracts from previous week:

Like I said last week, I am a risk averse person. So I guess I just don’t have the guts to made further trades after seeing the price volatility. And According to the price trend I observed, it is truly a better thing to offset early. Or I would bear a lot of losses.

In the next trading week, the first thing I will do is to offset the wheat and soybean contracts. I am not saying the prices of which are likely to increase. I am just a risk averse person who is content already with the current positive gains of the two contracts.

However, I am likely to hold on to the Corn contract that I have for a while, since I am bearing a minimal loss of that. And I’ll hold on to that because I also believe the price would decrease a bit because “in the US, the drop in crude oil prices and seasonally weaker gasoline prices has cut corn demand for ethanol.” Since the contract I got expires in the near future( December).

References:

1. http://www.barchart.com/charts/futures/ZCZ12

2. http://www.agrimoney.com/news/anz-downbeat-on-farm-commodity-prices—for-now—5184.html

In this trading week, I did not purchase any contracts until Friday because there would be a USDA release scheduled on that Friday.

In the report, US eases fears for grain, oilseed supply squeeze. And nearly every grain and oilseed commodities prompted expectations of a further trim to the inventory figure.

I made the following contracts right after reading the report and in only about one hour, I realized positive profits:

However, corn price was actually declining instead of increasing because of some foreseeing a reduction in the USDA estimate of harvested corn area. Luckily, the loss on corn is so small. So I am overall happy with this week’s trading game.

As I researched whether there’s other factors causing corn price to increase, I read  that “in the US, the drop in crude oil prices and seasonally weaker gasoline prices has cut corn demand for ethanol.” This demand shock on ethanol scheduled the corn price down. Corn price was actually decreasing as well:

What I lost was just because of wrong timing.

References:

1. “US eases fears for grain, oilseed supply squeeze“. http://www.agrimoney.com/news/us-eases-fears-for-grain-oilseed-supply-squeeze–5197.html

2. “Pity the grain trader?”  http://www.agrimoney.com/feature/pity-the-grain-trader–177.html

3. http://www.agrimoney.com/news/anz-downbeat-on-farm-commodity-prices—for-now—5184.html

4. http://www.agrimoney.com/futures.php

In this trading week, I found an interesting commodity future market website- Barchart, under which the Grain section might concerns MFREers the most:

http://www.barchart.com/commodityfutures/Grains

The interesting part about this website is that it has blogs components, in which we can read about blogs of people who trades as their jobs. I am not saying those people’s blogs have to be accurate predictions, but they probably have better accuracy than us, or at least than me:)

Informa lowered its estimate for the US corn crop by some 450m bushels 10.7bn bushels, citing a yield which it saw at 122.4 bushels per acre, below the previous forecast of 127.0 bushels per acre.

For soybeans, the yield estimate was raised, but by a 0.8 bushels per acre to 37.8 bushels per acre, adding an extra 65m bushels to the crop.

The comments follow a US Department of Agriculture assessment that only 40% of winter wheat seedlings were in “good” or “excellent” condition as of Sunday, the lowest reading since records began in 1985.

Below are the actions I am going to take:

1. Short on corn

2. Long on soybean

3. Long on wheat

References:

1.http://www.agrimoney.com/news/socgen-upbeat-on-wheat-prices-as-us-crop-struggles–5170.html

2.http://www.agrimoney.com/news/grain-soybean-prices-dip-despite-informa-data–5172.html

There are several website that I started using in the past trading week:

1.  CME Group. http://www.cmegroup.com/

This user-friendly website gives information on a overall glimpse, not in too much details though. But it does not have to have a general idea first to make further movements.

2.FOREXPROS   http://www.forexpros.com/news/commodities-news

On this website, I found it usually contain an “weekly outlook” article to predict the next week’s market.

http://www.forexpros.com/news/commodities-news/grain-futures—weekly-outlook:-november-5—9-240264

In this particular journal, it not only summarized what happened to the key grain commodities last week, it also predicts the future price pattern of the following week with a lot of detailed info. For example, it calls for attention for us to look at the USDA scheduled release on its updated crop estimates on November 9. It also offers how weather conditions are related.

In the past trading week, I traded these contracts:

I shorted on soybean because I read articles about Soybean futures trading levels going down as well as cash market deliveries decreasing. By the positive profits I’ve made, I made the right prediction last week. In addition, on this Friday, a new release has shown that the actual harvest level is much more than estimated, which decreased soybean price further more: “For soybeans, the yield estimate was raised, but by a 0.8 bushels per acre to 37.8 bushels per acre, adding an extra 65m bushels to the crop.” However, the fact that March soybean price decreased while December soybean price raised confused me.

I went long on Corn to reduce the risk of shorting on Soybean, for we learned from Jim’s class that these two commodities’ prices are of 60% possibility positively related. And it turned out a release came out that corn harvest level were smaller that estimated. However, as timing matters, the two contracts I made has opposite signs of profits.

References:

1.http://futures.tradingcharts.com/news/futures/DJ_U_S__SOY__Beans_Ease_on_Profit_Taking__Export_Sales_Disappoint_187726008.html

2.http://www.agrimoney.com/news/grain-soybean-prices-dip-despite-informa-data–5172.html