cancel
Showing results for 
Search instead for 
Did you mean: 
Contributor

Re: Observations from a cynical speculator...

Correction:

In my previous reply to Dapper-7, I stated that the funds sold over 22,000 corn contracts on Thursday. I miscalculated the math, as my calculator couldn't even process the enormous number of bushels represented by 22,000 contracts...

The correct figure is ONE HUNDRED AND TEN MILLION BUSHELS = 110,000,000 bushels!!

jrw

0 Kudos
Senior Advisor

Re: Observations from a cynical speculator...

I do believe the funds creat volatility, though I'm not convinced they make the trends in the longer run. If the ending stocks number are going to be tight they will be long, but they will occasionally take profits. Picking up on each other's behaviors is a fund trademark.

 

I believe it comes down to being knocked out by margin calls.

 

I DO believe the markets are broken, and I think the band aid approach of the CME and CFTC is an admission of that fact. There is one and only one market oriented counter measure - and that is the admittance of producer/hedgers to the club, because only they have the incentive to add the logistics of physical wheat as a reality check to specs, enforce the face value of contracts and force markets to respond to the value and logistics of the grain. Specs cannot and are not interested in the ultimate outcome of that unless they wind up having to deal with physical they are caught with. There is no argument against that which also doesn't undermine the basic theory of a futures market.

0 Kudos
Contributor

Re: Observations from a cynical speculator...

as i have said for years. each contract for grain should have a point or origen . each contract should be sold by a person producing it or a comerical who has it or has bought it. the way it is now you might as well go to a cassino. it is very hard to win in a game where the other player has millions more than you.

0 Kudos
Contributor

Re: Observations from a cynical speculator...

Maybe there should be some rules on trading to keep the generally uninterested parties honest. 

 

Bottom line is funds, etc can run corn to $12 but are there any buyers?  Livestock - close to being left behind at $6 and it's $7 now.  Ethanol - as it's been stated high gas prices mean less gas sold and they have margins to maintain as well.  China/export - they can't/won't buy it all.  At some point someone has to buy the end product and while demand will not go necessarily go to zero (though it could in some cases), it will drop hard enough >10% to eventually make our inadequate supplies into burdonsome supplies.  The whole notion that folks must buy and that they won't find alternatives is a socialistic point of view - it's not working so great with the presidents health care bill either. 

 

In many ways the new funds pouring money into our markets has been a great thing.  Being held hostage by adm et al meant grain prices would almost always be at the cost of production (I guess that's a perfect economy though).  The new players bring better prices and some volatility to give us more pricing opportunities.  However, these guys don't really care that they are creating problems  and would likely be just as happy with 50 cent corn as $12 corn - it just has to move.

 

thanks,

 

Pat

0 Kudos
Frequent Contributor

Re: Observations from a cynical speculator...

Jrw322 this is a great site. If the market is going against you, state your beef here. Marketeye will knock some heads and break some legs and things will come around.LOL Don't spend it all in one place!
0 Kudos
Contributor

Re: Observations from a cynical speculator...UPDATE

I just wanted to say thanx to all the guys who replied to my post...you all have some fascinating points-of-view! Here is what happened to my long July 759 trade that went limit down on me yesterday, due to the fund collusion I witnessed: I simply cannot believe my eyes, as I just closed out the trade, & sold with a one-cent profit at 760 (the high of the day). I am beyond happy, I am stunned. Man, this elevator ride back up was so fast! Now you just watch...after being told yesterday that cold wet weather was fully priced in, with very serious planting delays, today you will hear that some forecaster has changed his mind and the delays will continue. It is all just so rigged, and I am so fed up, but this finish to my April has over-ridden my anger, and I just closed my book for the month! Thank you all for buying my way out of yesterday's disaster! See ya'll in May, where you can look for a challenge to the prior highs in July corn before the funds come back to devastate the markets again...JRW

0 Kudos
Advisor

Re: Observations from a cynical speculator...

   jrw   It's the golden rule:  Those who have the gold, make the rules.   Yes, it may not be right or fair or whatever but that's the way it is.   They don't care if they are trading cattle, corn, or phone booths.  If they can make a dollar here or there the trade goes in.   About the only marketing principal I follow is "the trend is your friend"    or enemy......

0 Kudos
Senior Contributor

Re: Observations from a cynical speculator...

jrw..... The fact that you have been around all of those years you of all people know that the big boys only want you to be in there so they can take your money....... My guess is that has been that way a long time..... These expanded limits will make it harder for small guy to play and the big boys will have to then beat each other up to make money...... That had au t to be a lot of fun to watch...... p-oed

0 Kudos
Senior Contributor

Re: Observations from a cynical speculator...

how does 50 cent limits hurt teh small spec?

 

if a mkt goes limit, means zip in cn go limit 5 days

0 Kudos
Senior Advisor

Re: Observations from a cynical speculator...

You identified yourself as a speculator instead of a marketer. Speculation is not unlike casino action and that is the same thing that the funds are doing. They are betting on the best information they have accumulated from all sources. Plus they have computer models that deliver them buy and sell signals.

 

In my opinion a marketer seeks opportunity to make sales of physical product or to sell risk to the speculator types. There is risk, big risk, in trading commodities. No matter how bullish the fundamentals may appear to be there is alway the risk of unintended consequences.  The weather, the financial markets, world events can all spur rapid change in the markets. Not necessarily insider trading but analysis may spur that change on a dime and funds that are really heavy on one side of the equation may simply be lighting up on an over bought position. Risk management on a larger scale.

 

Irrational exuberence can drive markets to even higher highs. Fundamentals may well be the catalyst that triggers that bull market. But when the financials are involved panic may set in in a nanosecond.  It is true that the fundamentals and crop production may bring the highs back, but you have to have the money and the cajones to stand firm. Lacking either is a recipe for disaster, But then toughing it out and standing firm may not produce the outcome you want.

 

 

0 Kudos