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Commodity Wheat Markets

In: Business and Management

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Assignment Two
Commodity Futures Markets
A focus on Wheat

When I initiated my first trade I choose to buy wheat. I was hoping that the price of wheat on November 4th was at a low for the buying as selling period. The settle price to buy wheat for March 2015 was $5.42/Bu (CME group, Chicago SRW future quotes). I wanted to be a speculator and I thought that the price of wheat would go up so I bought wheat instead of selling it. The trend in the market had been downward moving in the past months. On September first the price was about $5.8/Bu and by the beginning of October the price had dropped to $4.9/Bu (CME group, Chicago SRW future quotes). I figured that the price was about to turn around and in the month of November the price started to rise again. This is when I bought wheat because I thought it would continue to rise for at least the duration of our project. I decided on wheat specifically because I thought I had a better grasp of the wheat market and it’s trend than I did of the other commodity options.

Based on the chart above and by Chris Arsenault a writer for Reuters dot com. Egypt, the worlds largest importer of wheat declared on Nov 25 that the World Food Program pledged to expand it’s aid to help out poor families to keep their children in school and out of the workforce (Chris Arsenault, Reuters2014). What this shows me is that on Tuesday Nov 25 the largest wheat importer says that they will be providing more family’s with more food and in turn the demand for wheat increased (Chris Arsenault, Reuters2014). The demand shifted up and caused an increase in price of wheat. The article says “75% of the 68 million people will have ration cards and that entitles them to subsided food, particularly bread (Chris Arsenault, Reuters2014).” This is why the demand and price increased on this day. The price went from $5.50/Bu to $5.58/Bu (CME group, Chicago SRW future quotes).
According to the price changes and an article posted on Nov 26th on the Ag web farm journal. You can see a clear picture of why prices are on the rise. The article talks about how wheat jumps to a one week high due to freezing temperatures in the U.S. (Farm journal, Bloomburg2014). The U.S. is the world’s largest exporter of wheat so when a freeze has the potential to harm the supply you will see large increase in price. That is exactly what has happened here. The article says, “Cold conditions last week appear to have caused some damage to U.S. winter wheat seedlings” (Farm journal, Bloomburg2014). Thus limiting the expected yield and supply of wheat available. A shift downward shift in supply will cause an increase in price. With this being the case it’s possible that there could be a shortage of wheat on the market so people are willing to pay more for the guarantee of the price going up further.
On November 4th I bought a wheat contract, which is 5000 bushels of wheat at $5.42 per bushel (CME group, Chicago SRW future quotes). My total cost that day was $27,100.00 (5000*5.42). I then held on to my contract until November 24 when the settle price was $5.4950/bu. This means on that day I sold my contract of 5000 bushels for $27,475.00. On that day I also completed a round turn, which means that I had to pay my broker a $30 fee. So my total profit for this game would be $27,475-$27,100-$30=$345. The way I did this was take the amount that I made from selling the contract and subtract the amount that I paid for the contract and finally take out the money I owe to my broker. Leaving me with a profit of $345.

List of references
Ag web, Farm Journal, Bloomberg November 26, 2014 Website: http://www.agweb.com/article/wheat-climbs-to-one-week-high-on-us-freeze-blmg/ (accessed November 30 2014)

Chris Arsenault, Reuters author, Tue November 25, 2014 website: http://www.reuters.com/article/2014/11/25/egypt-un-food-idUSL6N0TF3V520141125 (accessed November 30 2014)

CME Group, Future quotes, Real time resource, December 1 2014 Website: http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/wheat.html (accessed November 30 2014)

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...ทิศทางโลจิสติกส์ประเทศไทยและทิศทางงานวิจย ั รศ.ดร.ดวงพรรณ กริชชาญชัย สํานักประสานงานชุดโครงการวิจยโลจิสติกส์ ั ภายใต้ สํานักงานกองทุนสนับสนุนการวิจย (สกว.) ั egdkc@mahidol.ac.th เครือข่ายนักวิจยไทยด้านการจัดการโซ่คุณค่าและโลจิสติกส์ (ThaiVCML) และสํานักประสานงาน ั ชุ ด โครงการวิจย โลจิส ติก ส์ ซึงได้ร บ การสนั บสนุ นโดย สํา นั ก งานกองทุ น สนับ สนุ น การวิจ ย (สกว.)ได้ ั ั ั ดําเนินงานด้านโลจิสติกส์และโซ่อุปทานมาตังแต่ปี 2545 วัตถุประสงค์หลัก คือ การสร้างให้เกิดงานวิจยและ ั องค์ความรู้ด้านการจัดการโลจิสติกส์และโซ่อุ ปทานขึนในประเทศ โดยใช้กลไกประสานงานวิจยในกลุ่ ม ั เครือข่ายนักวิชาการให้เชือมโยงกับโจทย์จริงจากภาครัฐและภาคอุตสาหกรรม ในการนี ทางสํานักประสานงานชุดโครงการวิจยโลจิสติกส์ ได้รวบรวมข้อมูลทีผ่านมาทังหมดใน ั ประเทศรวมถึงงานวิจยด้านโลจิสติกส์และโซ่อุปทานในกลุ่มเครือข่ายนักวิจยไทยด้านการจัดการโซ่คุณค่า ั ั ั และโลจิสติกส์ (ThaiVCML) และกลุ่มงานวิจยทีสนับสนุ น โดย สํานักงานกองทุนสนับสนุ นการวิจย (สกว.) ั และการระดมสมองในงานสัมมนาเชิงปฏิบตการระดมสมองเพือกําหนดทิศทางโลจิสติกส์ของไทย ในเมือวัน ั ิ อังคารที 9 ธันวาคม 2551 ทีผ่านมานัน สรุปความได้ดงนี คือ ั 1) ประเทศไทยใช้คาว่า “ โลจิสติกส์” เป็ นเครืองมือเชิงกลยุทธ์ เพือนําสู่วตถุประสงค์ ํ ั ความสามารถในการแข่งขันของประเทศ ” ( National Competitiveness ) 2) “ โลจิสติกส์” ต้องมี “บริบท” ให้อยู่ เพราะหลักการจัดการโลจิสติกส์จะขึนตามบริบท และ สิงแวดล้อมทีเปลียนไป 3) บริบทของโลจิสติกส์ในประเทศไทย มี 2 ระดับใหญ่ๆ คือ ระดับจุลภาค และระดับมหภาค โดย กรอบของโลจิสติกส์ในประเทศไทยสามารถสรุปได้ดงภาพ คือ ั 1 หากจะแบ่งระบบโลจิสติกส์ของไทยตามบริบทแบ่งได้...

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