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Honored Advisor
Posts: 7,659
Registered: ‎07-18-2011

Report and CBOT.......

Keep in mind that the futures market and usda reports are not based on actual crop size or actual corn bought and sold.

Most of us know this so you sophisticated traders and producers go back to the political cartoons....this is for us simple farmer/media types...

 

Today(in the daytime session) in cbot corn trade 82+K contracts changed hands......with 250 trading days a year that will be somewhere in the neighborhood of 110 billion bushels of corn traded annually.  So lets factor in that nearly all contracts are canceled out by a second contract...... now we are at 55 billion bushels traded not far from or maybe in excess of 4 times the amount that is raised in the US actually traded guesstimate.

 

But this is a race to agree and we are only talking about the contracts that found "agreement".

The opening interest was 323K contracts means that 4 times that amount was available today ------- so annually there is somewhere around  250 billion bushels offered to the market annually.

Now us those of us who raise corn are trying to sell 13.5 billion bushel annually.

Grain users are trying to buy 13.5 billion bushels annually.

For a total of 13.5 billion bushel trading hands assuming buyers and sellers are holding some inventory equal somewhat to the carryout figure. The carry becomes important as we all guess how much grain the farmer has in his bins and the user has on the ground(no farmer can afford that much handling and waste)

 

The other 237 billion bushels being offered on contract belong to the gambling speculators who are placing bets on a daily basis to make money on the trend.

 

Less than 1/2 of one % of the corn offered is produced grain, or used grain for that matter.

Users and producers are both hoping to take advantage of the speculation in the market...... 99.5% of the trade is speculation or profiteering from temporary ownership(if that makes it sound better).

I think the monopolistic presence and practices of end users are the upper hand in that battle.......

 

Don't get trampled at the casino on those once a month usda fiesta's......

 

 

 

Senior Advisor
Posts: 1,069
Registered: ‎05-20-2010
0

Re: Report and CBOT.......

Excellent points sw....  and corn is not even close to the most speculative contract. Take a look at the Nasdaq,

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Senior Contributor
Posts: 320
Registered: ‎08-02-2012
0

Re: Report and CBOT.......

Exactly more towards the point I have been trying to make for years. Nobody ever said a little paper on the side to make a buck wasn't ok. However to this extremely out of the park monopoly market has gotten way out of control. Should be illegal at a certain point when the producers are suffering terrible losses so these traders can play in fantasy cropland to make profits regardless of who's job is lost or who's out on street fighting for a way if living. Good point ☝️
Veteran Advisor
Posts: 2,992
Registered: ‎02-11-2013
0

Re: Report and CBOT.......

those numbers are just mind boggling........you know it used to be aginst the law to buy or sell something you didn't

have.......wouldn't this not be the same, we just don't produce the items sold or bought.

 

we can see there is plenty of stuff going on....the cme makes money (fees) on each trade......look at the money

rolling in.

 

from what I've hearing, a group will take a position in the market a few days before, then they will put in a whole bunch

of orders, just beyond what they feel will fill.........those orders will move the market, an thus the position taken a few days

ago, become profitable....they then unload their position, and cancel the unfilled orders........it this legal, from what I understand

it is, is it moral.......no, is it underhanded, yes.....and the beauty of using the electronic trade, they can kill those orders in no time

at all, not allow orders to be filled.

 

 

Honored Advisor
Posts: 7,659
Registered: ‎07-18-2011
0

Re: Report and CBOT.......

Thanks but ............

 

What is mind boggling is how much we have shoved an inept washington bureaucracy into the limelight.

For the same old reason..... that humans fall for every time....... They got access to lots of $$$$ so they must know what their doing....  (She's new in town and chews tobacco but her daddy drives a caddy so lets make her homecomming queen)---- I am working on the tune and a second verse...

 

 

We have allowed the usda,  media egos  and the corporate hired mouthpieces to take over the wheel of our commodity markets.......... while users cheer and producers hang on and hope they can stay in the car.

Market movement is not based on buying or selling activity and the SEC ignores it.  

When there is not enough wheat in the US to supply bierocks to octoberfest or donuts to policemen.......... the SEC still will know China is awash in wheat........ and who controls the open futures market is no big deal.

 

From the top down folks in washington we are more likely to see a mandatory planting regulation than a reasonable loan rate or a regulated futures market.

 

 

 

 

 

Veteran Advisor
Posts: 1,039
Registered: ‎10-18-2016
0

Re: Report and CBOT.......

Producers are advised to hedge their crops.  Typically, that would mean sell futures or forward contract n the spring when prices are high and buy back or deliver in the fall when prices are lower.  Why does speculation which you have no reason to be part of bother you?  Sell high once and buy low once.  Of course, not every year is the same, but the principle is the same.  

 

Many producers like oil companies, aircraft manufacturers, light bulb makers and so on hedge.  They hedge the price of their inputs and they hedge the price of money.  Farmers can hedge if they want to.  Some of us do.  Not so many speculate by taking the other side of the hedge.  

 

 

Honored Advisor
Posts: 7,659
Registered: ‎07-18-2011
0

Re: Report and CBOT.......

3 months is about as far as most endusers extend commitments.

Senior Advisor
Posts: 18,805
Registered: ‎05-13-2010
0

Re: Report and CBOT.......

The government forces us to have a license for almost everything we do. Grain traders should all be licensed and to receive that license they should have to show proof of their ability to receive or give shipment to any contract they enter. If you don't have the storage you can't buy. If you don't have the grain to deliver you can't sell. This ability should be for ever contract they enter.