Re: Some Good News For Corn
Remember that when the delivery time comes for a contract, the shorts have to make delivery. So sooner or later, the "fake" sales have to cover their shorts, and that will drive up prices. The problem is can you wait until a week before first delivery date to sell your corn ? That's a big risk that many would not take.
Let me also point out that the hedge funds selling contracts for corn that they are not producing are usually not setting a price trend, but reacting to it. The speculative trader -- of which I am one - does not automatically say let's sell corn so when the producers come to market they will push the price lower for me to buy back at a lower price. Doesn't work that way. Instead we look for trends to develop in the fundamentals and technicals of the market. I initiate just as many positions by buying as I do selling, in fact I was long a lot of corn in early June. Fundamentals and technicals changed and then I got short. If the same indicators turn positive again I will cover my shorts and go long. Speculative traders will not just sell, because they know that other speculative traders who have reasons to buy can come into the market and bid the price up, sometimes substantially, like last winter.
So if the speculator has any impact on a market, its to push the price in the direction of the underlying trend. Prices would get to the same endpoint, the speculators only get the price there faster. Which is why its important for the farming community to keep an eye on the technical factors that drive the prices of corn, or work with an advisory service that performs that market intelligence for you.