This week I was still experiencing a big loss from shorting the orange juice futures. Although the futures headed lower today, I was expecting that it would remain with range of this three-year high for a while, for which harvesting for oranges has finished and a series of winter storms has brought hard freezes and frosts to one of major producers (Florida). Even though my potential loss on this short sale could go even higher, holding and covering it when prices fluctuating to a relatively lower point would be my best strategy at this point.
Moreover, wheat comes to the harvest season and it is said that this year’s production would break the record by an even bigger margin. I shorted one contract with the expectation that the higher global wheat stock would lead to a fall in future prices. Same for the cotton futures, the prices were sitting at a relatively high level recently and showing a sign of declining from NASDAQ’s 3-month price quotes chart. It eased back from nine-month highs with concerns over the dent to China’s imports. I speculated that the new cotton future prices would challenge to exceed the present high levels and thus I shorted the contract. As to cocoa, I was holding my long position for several days and it was finally showing a gradual price climbing. According to my research, the production shortfall in Ghana and the fact that the ongoing EI Nino weather phenomenon appears to be strengthening the cacao future prices. I should not ignore the volatility of pricing and fragility of supply in the cocoa market. I would try to capture a price high and close my position shortly at a higher yield.