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Senior Advisor

Re: So, hedge funds got clipped?

Just like us, paper traders are trying to read the tea leaves but, given the risk of buying contracts on margin they don't have the luxury of time. Any suspicion or reaction by anyone trips a cascade. That's the game. Since this is usually a temporary condition it reflects introduced volatility and risk. They aren't trading grain. They are trading paper. News on grain is just the catalyst and excuse. It's a stronger psychological tie than physical grain. If they were trading actual physical grain using contracts the game would be entirely different. You could lose or gain equity just as producers do. But you wouldn't get wiped out. And it would take a lot more capital to make or lose much money. The key is the perception that big money can be made using paper on a margin. And you can. And you can get wiped out.

 

Longer term physical trends are not an important issue for specs. Surviving the next day is.

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Senior Contributor

Re: So, hedge funds got clipped?

FYI  no hedge fund uses the full leverage the exchs provide.

high leverage users die.few HFs use more than 150% in investments meaning for 1$ in equity

they at a maz have 1.50 in investments.

 

Most HFs are far less levered than 40% of farmers.

 

HF are short wheat going way back,,, earning   excess long premia,, ie bullish producers

who don't sell, as       the mkt ..

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Senior Contributor

Re: So, hedge funds got clipped?

hedge funds   ----   add liquidity and       price discovery and

 

are another crop tpo harvest.

 

Unequaled anytime in history the giant length of specs in index funds of teh last 4-5 yrs,

 

ALLL that excess there for  producers to harvest..

 

 

wheat nor cocoa is  capital mkt  thye are commodities meant to be grown and eaten..... period.

longs die over time.   earn from their lack of knowing what  "carry" is.

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Senior Advisor

Re: So, hedge funds got clipped?

And I was just reading a few days ago how long the hedge funds were in grains going into this last report.

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Senior Advisor

Hedge fund longs and shorts

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Senior Contributor

Re: Hedge fund longs and shorts

HFs mostly follow trends.

 

newspaper report trash that sould pertainent..

 

producers harvested RECORD  $$$$$ as  nut case specs though W was an asset.  

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