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Veteran Advisor

Thanks to ole eagle eye

He brought something to our attention.  It appears the volume at the cme commodities is up 25% compaired to last year.


I'm not quite sure what this means, nor it's impact, but here is what i'm thinking.


It is perhaps a comformation that the cme's marketing department has been a success.  I've seen numerious adds in the

"regular" money papers how the cme is an "additional investment platform".


Yes, the additional 25% has given more liquidity and volativity to the market, and that can be "good at times".  In theory

it can push the market farther, in both directions.


but, with the additional money, i believe the additional participants have brought with them a whole new tool set, which

is not acustomed to work in the commodity market, but rather than the stock market.


These new tools look less at the "fundmentals" of the market, but rather how the market, or chart "acts".


this is somewhat new to agcommodities, although we have had technical trading for years, but this new set of tools

takes it to a whole new level.


the new tools never took into account "fundmentals".  I've seen some of the programs being offered, and mostly

signals are based on activity, but not fundmentals.  Most of this was developed by wall street people, where, i dare

say, are not fundmentals.  trying to figure the value of a stock is far different to caculating the value of a bushel of wheat or corn.



in my opinion, i do not feel this will bode well for farmers.  Most are not skilled in commodity trading, and adding in these

new "variables" will make things worse.


the next question is, how has all this new business, and their usuall rapid in rapid out, and their prime method of value

determination is "movement" will this impact the charts


many people for many years have gained knowage, and insight in possible market movement, but using technical charting

and tools.


The question is, will this new trade squew the chart data to render it useless ?


i have talked to one fellow that is a firm believer in the charts, make some comments to this effect.  He said the price

used to have fundmentals factored in along with some chart signals, and some speculation.  The trades generated

by the new tools, are in some cases rending chart study useless  (last couple of years).


any other ideas ?


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4 Replies
Veteran Advisor

Re: Thanks to ole eagle eye

This type of trading has turned the  Wall St  deal into a different world - exit the human factor bring in the electronic light speed --   VIVA  Las  Vegas   - 

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Honored Advisor

Re: Thanks to ole eagle eye

It is a money decision, pure and simple......

CME as well as every other major corp in our business went global.... 

They don't care if fundamental production or usage is part of the equation,  in fact those factors slow the pace "off shore" betting.


Business is more international than ever and the US is more government manipulated and regulated than ever.  All factors push the corps into an international stance...


The thought reminds me of the SF magazine cover this month..... With the big grain bin and the, "BIN BUSTER/ Production out runs farm storage", label in bold type.... Along with the magazine was a questionaire to fill out to extend my "free" subscription...

You can be sure the cover had a lot more to do with getting the number of grain storage advertisers inside the magazine than it intended to comment on the grain harvest...  It is a money decision....


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Re: Thanks to ole eagle eye

SW--I quit filling out those questionaires and if it results in me no longer receiving the magazine then so be it--helps reduce the amount of trash I have to take to the dumpster.
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Veteran Advisor

Re: Thanks to ole eagle eye

I remember when the word '' International '' really meant something and had substance - today just a word smith business label - remeber all the hype about  '' I S O - 9ooo ''  etc. - it sure sold a lot of manuals though ---   

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