My equity balance is $30272.29, and I have incurred a loss of $1762.50 by selling three December wheat contracts, and selling two December corn contracts. I was taking on short positions for both contracts.
Frankly speaking, I have not been meticulous enough to read through the futures technical analysis to determine the right position to take on for the market. I have also mistaken the fact that the impact of reduced demand of grain from the cattle-feed sector, ethanol producers and foreign importers would result in low corn and wheat prices for at least two more weeks.
In addition, while I was browsing through the Chicago trading board website for the chart of corn and wheat futures, I thought the market is going to be bearish, such that prices of both commodities are going to fall as the wheat harvest season arrives.
However, it is very unwise to simply speculate the fall in prices based on the downward movement of prices in the past few days for the general grain commodities market. This is due to fact that the market is always full of unpredictable volatility. As a result, I can never fully understand the market situation just by observing recent historical price trends.
In fact, the analysts’ reports indicated that the market for wheat and corn is probably going to be bullish as opposed to bearish. As stated by Derek Squair, president of agri-market trend marketing, “Just because wheat is now easier to sell, it doesn’t necessarily mean that now is the time to sell it. Wheat is a lot more complex than the non-board grains, with additional grading factors and other channels.”
In general, analysts have strong recommendation of BUYING rather than SELLING, which in effect, indicates that the USDA’s announcements of the shortfall in wheat and corn supplies in the market have profound impact on prices.