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Frequent Contributor

Re: "New Food Crisis"

To say the futures market is not anticipatory completely undermines what a futures market is.  People are making bets or hedging risk based on what the market anticipates prices to be at some point in the future.  Many decisions are made based on what the futures markets say the price is going to be at some point in time.

 

I believe that at times futures lead cash and at times cash leads futures.  But with the huge speculative element in the futures markets, everything gets pushed higher and lower than where it probably should go.  Just the dynamics of the market structure.  I do agree with your assessment that there is a disconnect between the cash and futures and it has become much harder to use for hedging purposes.  Guys just can't take the big price swings and all the required margin money, especially smaller producers.  I think the markets would have more integrity if excessive speculation was reigned in by way of position limits and removal of hedge exemptions to those that are not bonafide hedgers (index funds) and are actually connected to the physical side of the market.  The exchanges and regulators are unlikely to do anything because of as you say greed.  It's no surprise to see that after regulators leave their position, they wind up getting a cushy job someplace within the industry they oversaw.

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Frequent Contributor

Re: "New Food Crisis"

At some point in time, ETF's will be reviewed by history as one of the biggest ponzi schemes ever invented.

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Senior Contributor

Re: "New Food Crisis"

I will allow that grain futures are anticipatory to the extent that they look to widely perceived patterns of planting and yields and bank on that as a starting point, as does everbody. Essentially these are averages or trendlines and are universal goal posts. But the futures aren't a crystal ball. They seem to very much lag in terms of the significance of changing conditions until it is undeniable.

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