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Honored Advisor

Are "traders" the enemy?

I don`t think so, I kind of look at it as a consignment auction.  If you take a disc to a consignment sale and hope it brings $2,000, but it only brings $1,000..who do you blame?  The auctioneer? the crowd? yourself? Other consigners that flooded the market bringing in too many discs like the one you are trying to sell?

I would say traders resemble an auctioneer, they get their commission regardless what your disc or corn sells for.  They would probably prefer your disc or corn is higher so they make more commission (funner making making money in a up market than a down market and having to always short).

The crowd or the endusers, they want to buy your disc or corn cheap as they can to stay profitable, you can`t blame them, you don`t patronize a implement dealer that sells the highest price machinery.

Other consigners or corn growers...well yeah we`re flooding the market, too many disc`s and too much corn.

I left out the real culprit the USDA ...or "Machinery Pete"  Smiley Happy  they broadcast that there`s "too much corn ..too many disc`s on the market and that puts a damper on the crowd who figure they`ll get the corn or disc much cheaper.

But the traders, they just do their job taking orders buying as reasonable as they can or make money in their own accounts.  If a feedmill needs corn they put out the word "no drying charge on corn below 19% and there`s a 2 hour line out their driveway.  So, I don`t know, someone is going to have to say "uncle!".

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17 Replies
Esteemed Advisor

Re: Are "traders" the enemy?

The traders that you describe are a very small and meaningless part of the game at this point. It is the algo quants driving the ship, and in a huge way, their spread position is a mere 2 bil bu of corn for example. During the report, somehow they got the data first and bought before it was even public and then sold it 1 min later for a quick 8 cents, since they pay no commissions, and really don't need margin, it is a pretty high rate of return. :-)

Senior Contributor

Re: Are "traders" the enemy?

Exactly, a quick buck nevertheless.  I’m not necessarily saying they’re the enemy just are they even relevant as another middle man cash grab.  Electronic and paper changed the game into unrealistic trade.  If you want a bushel of corn I’ll sell it to you and deliver, you should not be able to then sell said bushel until it’s in your possession.  Only then does the price fluctuate based on demand.  Example: the grocery stores still 7 years later have not corrected or adjusted from the grain rally in 2012, prices continue to increase regardless.  Even with what USDA says we have grain for years.  Honestly at these prices wouldn’t bread be like 10cents?.

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Contributor

Re: Are "traders" the enemy?

Can someone explain why the price of a commodity goes down when the only excuse of the day is traders took profit. ? It's just paper right. 

Honored Advisor

Re: Are "traders" the enemy?

Isn`t it funny, with the stock market "traders" want the Dow, NASDAQ, S&P to go up, if anything they are charged with driving that market up.  If I`m a trader with the A,B,C, D grain companies I suppose I want grain cheap so I can get rid of it in the world market? 

But I think we all work together in unison to drive our prices down, without a surplus they couldn`t  pull off what they are pulling. 

Advisor

Re: Are "traders" the enemy?



It's all about confidence and perception management.  And all the public keeps reading is how the world is awash in soybeans and corn.  Until that changes, I can't image that prices will change.

@BA Deere This is something you may be interested in...or not.   Scientific outlining of why next year's attempt at planting and the 2 years after that are expected to be even worse than this year's.

https://www.youtube.com/watch?v=lk4-B_4WxII

Honored Advisor

Re: Are "traders" the enemy?

In reguards to the original headline question..

May not be an "enemy" BUT

The sure as h e double l aren't friends .

Honored Advisor

Re: Are "traders" the enemy?

I agree with steve...... if a 2 million sell moves the market down 8 cents then ten minutes later it gets bought back.  It should be a "no effect" trade...... but if it is 2milion every morning at 9am for two weeks  then a 10 thousand buy back for the following 6 weeks .... profits can be generated.     By creating a trend.   and then turning that trend when in a planned way.

It is called  ----- the federal agency--SEC--- that is supposed to regulate the activity lets it go....... for the high tech trade because they don't work that hard.  Or accept political contributions instead.   I doubt they have the ability to oversee CBOT in reality now that it is computer driven.   

I never thought funds should have been allowed to work the futures like they do.  But they do.

Honored Advisor

Re: Are "traders" the enemy?

Thanks for the link Freedom, I`m playing it now.  Your link on China`s veg oil inventory, the chart looks like they really have been culling inventory on especially Canola oil, giving "just in time inventory" new meaning.  As big as they are drastically cutting the reserve gives a false sense of surplus in the world.

A few years ago, China subsidized farmers to raise corn incentivizing them to the tune of $7-$9/bushel, they built a huge reserve and it spoiled...they`re about as bad as I am storing grain  Smiley Happy

If we are somewhat entering a mini ice age and nations no longer have reserves, that could set up for a perfect storm in rationing prices.  Unfortunately, I don`t have deep enough pockets to gamble on it, but I won`t be contracting anything for `20.  Just as I`ve been doing the last few years, perhaps "this time" the broken clock will be right?   Smiley Happy

Frequent Contributor

Re: Are "traders" the enemy?

Heck yes they are.

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