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Critisizing the Merc?

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Mike

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The fallacy of corporate agribusinessís so-called "supply and demand"
argument is suggested by figures obtained from the Futures Industry
Assocation and the U.S. Department of Agricultureís Crop Production
Summaries. In the year 2000, for example, figures show that for each
bushel of wheat produced by the farmer, 16 bushels were traded on
commodity exchanges, for corn the ratio was one to nine bushels, and for
soybeans a staggering one bushel produced for every 31 traded.

A critic of this so-called agricultural "paper blizzard harvest," still
called by some the "free market" system, Texas farmer and a
representative of the American Corn Growers Association David Senter
believes that immediate steps need to be taken to curb manipulation and
speculation that affects our day-to-day prices.

"CBOT speculators are depressing the price of commodities by selling
unlimited numbers of futures contracts, regardless of what we can
produce or whatís in storage. These paper contracts with nothing to back
them up should be barred."
Reflecting on this deification of the law of supply and demand, one
veteran trader told author Tamarkin that "itís just a bunch of numbers.
And we all know that people use statistics the way dogs use lampposts
--- for convenience rather than illumination."
 

Sandhusker

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Speculators add liquidity so producers have a better chance of filling their orders. Considering that speculators are generally losers who know very little about the underlying commodity compared to the producers of that commodity, I'd think producers would welcome speculators with open arms. They don't know when prices are too far out of whack - the producers with the commodity in his back yard can take advantage of those city boys.
 

Mike

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Sandhusker said:
Speculators add liquidity so producers have a better chance of filling their orders. Considering that speculators are generally losers who know very little about the underlying commodity compared to the producers of that commodity, I'd think producers would welcome speculators with open arms. They don't know when prices are too far out of whack - the producers with the commodity in his back yard can take advantage of those city boys.

Here in the information age anyone could know as much about the crop situation (harvest) nationally, or internationally, as I could. Just because I grow a few ears of corn doesn't make me an expert on the harvest or consumer data.
I'm not arguing, just looking at it in different ways.
 

Sandhusker

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Mike said:
Sandhusker said:
Speculators add liquidity so producers have a better chance of filling their orders. Considering that speculators are generally losers who know very little about the underlying commodity compared to the producers of that commodity, I'd think producers would welcome speculators with open arms. They don't know when prices are too far out of whack - the producers with the commodity in his back yard can take advantage of those city boys.

Here in the information age anyone could know as much about the crop situation (harvest) nationally, or internationally, as I could. Just because I grow a few ears of corn doesn't make me an expert on the harvest or consumer data.
I'm not arguing, just looking at it in different ways.

Most of those speculators are simply reading reports from other people and are betting at the Chicago casino. I remember in the late 80s when traders drove beans over $13 because it was dry in Illinois and Iowa - and all the farmers every where else were grinning ear to ear while locking in at those rediculous prices.

What do you mean you're not an expert on corn? Compared to a common putz in New York City that's trying to make a fast buck, you are an expert.

Huskers lost - it's 97 and windy - I'm looking for a shady spot to drown my sorrows.
 

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