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Econ101

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Sorry, BMR, I was am married to a real woman and not this forum. Sometimes even I have to remember that. We were out making apple butter over a hickory fire this weekend. It turned out great. You really have to cook those apples down a long time. Then we canned all of it. Everyone had a real good time.

No, the answer to your question is no. The defenses for the market manipulation were well thought out in advance by the lawyers of Tyson/IBP as you can see by SH's arguments.

Essentially, in commodity markets, the way to use market power is to differentiate and then discriminate. Differentiation on anything except the product for the same time period could be considered the abuse of market power.

The case of abuse of market power really came down to these elements in the end. If the delivery and possession of cattle in the captive supply was essentially the same, then competitive markets with transparency would have reduced differences in the two markets to close to zero. Sometimes the market would get it wrong and one would be higher than the other. Statistically speaking these differences would have washed out over longer periods of time.

The problem with part of the captive supply was that its price was tied to the cash market. Therefore, any discrimination between the cash market would, week after week, decrease the captive supply price. This would turn out to be a suppression of the whole beef market.

In answer to your question, the futures market is method of setting the price of your commodity in advance with a marketing tool. If the futures price was different than the cash price (quality considerations taken into account) in the same time period for delivery, then yes, there would be cause for futher study to see if there was market manipulation. If the price you are talking about is a price that is set with a REAL difference in time period for possession and delivery, then there could be a price differential between the cash market and the futures market and therefore would not be evidence in itself of market manipulation.

As you know, the futures market meets the cash market as the time difference between them decreases. When it is the same time period for delivery, the price should be the same (with the little differences in time period showing no statistical difference). Look at any of the commodity markets and you will see this is how it works. Gold, oil, silver, or whatever.

I know this is a little confusing unless you think about for a while but we can go over an example if you want. (I rarely proof read before I post on this forum so I always reserve the right to correct or make clear what my I am trying to say).
 
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Anonymous

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Kindergarten: "If the delivery and possession of cattle in the captive supply was essentially the same, then competitive markets with transparency would have reduced differences in the two markets to close to zero. Sometimes the market would get it wrong and one would be higher than the other. Statistically speaking these differences would have washed out over longer periods of time."

BMR, since arguing with Kindergarten is like arguing with a post, I'll just tell you that he is totally wrong on this. I explained to him that this week's cash market deliveries and this week's formula deliveries, WHICH WERE PRICED OFF LAST WEEK'S CASH MARKET, would not be the same because each week has different supply and demand factors playing on the market.

Doesn't matter how many times I explain it, Kindergarten keeps spreading this same bullsh*t.

THIS WEEK'S CASH CATTLE ARE PRICED BASED ON THIS WEEKS SUPPLY AND DEMAND FACTORS. THIS WEEK'S "NON NEGOTIATED" FORMULA CATTLE ARE PRICED BASED ON LAST WEEK'S SUPPLY AND DEMAND FACTORS.

There, I said it again and Kindergarten will not refute this yet he'll go on ignoring this fact and continue to repeat the same garbage like a programmed robot.


Kindergarten: "The problem with part of the captive supply was that its price was tied to the cash market. Therefore, any discrimination between the cash market would, week after week, decrease the captive supply price. This would turn out to be a suppression of the whole beef market."

Yet miraculously prices move higher at times blowing this theory clean out of the water.



~SH~
 

Econ101

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~SH~ said:
Kindergarten: "If the delivery and possession of cattle in the captive supply was essentially the same, then competitive markets with transparency would have reduced differences in the two markets to close to zero. Sometimes the market would get it wrong and one would be higher than the other. Statistically speaking these differences would have washed out over longer periods of time."

BMR, since arguing with Kindergarten is like arguing with a post, I'll just tell you that he is totally wrong on this. I explained to him that this week's cash market deliveries and this week's formula deliveries, WHICH WERE PRICED OFF LAST WEEK'S CASH MARKET, would not be the same because each week has different supply and demand factors playing on the market.

Doesn't matter how many times I explain it, Kindergarten keeps spreading this same bullsh*t.

THIS WEEK'S CASH CATTLE ARE PRICED BASED ON THIS WEEKS SUPPLY AND DEMAND FACTORS. THIS WEEK'S "NON NEGOTIATED" FORMULA CATTLE ARE PRICED BASED ON LAST WEEK'S SUPPLY AND DEMAND FACTORS.

There, I said it again and Kindergarten will not refute this yet he'll go on ignoring this fact and continue to repeat the same garbage like a programmed robot.


Kindergarten: "The problem with part of the captive supply was that its price was tied to the cash market. Therefore, any discrimination between the cash market would, week after week, decrease the captive supply price. This would turn out to be a suppression of the whole beef market."

Yet miraculously prices move higher at times blowing this theory clean out of the water.



~SH~

SH, if packers are not arbitraging the differences out between the cash and captive supply markets for cattle that can be delivered to the plant at the same time, there is evidence of market manipulation. Period. Sorry you don't understand that fact and want the different time period between price determination and actually delivery and possesion to be a red herring. Pickett did not believe that and the jury dd not believe it either.

Since you have continuously mischaracterized the case, maybe you should stop trying to comment on it. BMR asked the question.
 

Big Muddy rancher

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Econ what is the factors that priced those September cattle have changed.
Price of grain can change from September to January.

The price of fat cattle can change.
Demand for cattlle, ie for tax reduction.

Availability of cattle changes.
Theory doesn't alwatys work in the corral. Any cattle man that's sold and bought cattle knows that.

Weather can affect the price, cattle can come to market faster or slower , that will affect the prices.
Should feed lot operators not be allowed to manage their risk by not contracting fats?
Then by the same token should ranchers not beable to manage risk by not contracting calves for future delivery?
These video auctions that sell the calves for future delivery are a form of contracting.
Funny that the LMA hasn't tried to outlaw video cameras. :cowboy:
 
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Anonymous

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Kindergarten: "SH, if packers are not arbitraging the differences out between the cash and captive supply markets for cattle that can be delivered to the plant at the same time, there is evidence of market manipulation. Period. Sorry you don't understand that fact and want the different time period between price determination and actually delivery and possesion to be a red herring. Pickett did not believe that and the jury dd not believe it either."

YOU ARE FLAT WRONG, PERIOD!

Since formula cattle and cash cattle that are delivered within the same week are based on supply and demand factors for seperate weeks, your argument here is that the supply and demand factors from one week to the next week should not change. That is the most assinine thing I have ever heard.

Don't tell me what Pickett and the jury believed and what they didn't when YOU DON'T KNOW! You admitted that you never read the court proceedings. YOU ARE MAKING THAT UP!

You are a complete phony!

Go make some maple butter or whatever you washed up liberal professors do when you are not misleading people with false information.


~SH~
 

Econ101

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Big Muddy rancher said:
Econ what is the factors that priced those September cattle have changed.
Price of grain can change from September to January.

The price of fat cattle can change.
Demand for cattlle, ie for tax reduction.

Availability of cattle changes.
Theory doesn't alwatys work in the corral. Any cattle man that's sold and bought cattle knows that.

Weather can affect the price, cattle can come to market faster or slower , that will affect the prices.
Should feed lot operators not be allowed to manage their risk by not contracting fats?
Then by the same token should ranchers not beable to manage risk by not contracting calves for future delivery?
These video auctions that sell the calves for future delivery are a form of contracting.
Funny that the LMA hasn't tried to outlaw video cameras. :cowboy:

BMR, You are correct about all of that. The difference between the cash price and the futures prices approaches zero as the time difference approaches zero. Small anomolies are to be expected but an indication of market manipulation could be seen if it is statistically significant over a period of time. Taylor showed (I believe, as I did not review his work completely) that there was a statistical difference. My questions to Azzam also indicated this to be the case. Please don't get the differences between a futures price whose delivery date is different than a futures contract where the delivery date is the same as the cash price delivery date. Big difference.

Futures trading does not have a lot to do with the case except that it also thins the cash market and makes it easier for price manipulation. Differences in the cash market and the Futures pricing for the same delivery date is key.
 
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Anonymous

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Not many years ago the same packer blaming conspiracy theorists accused the large packers of manipulating the futures market. A big government investigation was conducted and it was discovered that the large feeders had a far greater number of short contracts than the packers did. Another baseless conspiracy theory shot down in flames with the facts.


~SH~
 

Econ101

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~SH~ said:
Not many years ago the same packer blaming conspiracy theorists accused the large packers of manipulating the futures market. A big government investigation was conducted and it was discovered that the large feeders had a far greater number of short contracts than the packers did. Another baseless conspiracy theory shot down in flames with the facts.


~SH~

SH, what are you trying to say? I did not make an allegation about the futures market. I merely explained that futures markets prices and cash market prices converge as the time differences between them decreases.

It is better for people to think that you are a fool than for you to post on this forum and remove all doubt.
 

fedup2

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I would like to point out one thing that may confuse some. The references to 'futures deliveries'. (and feel free to correct me if I am wrong) There are no deliveries in the fed cattle market as it is cash settled.

Here are a couple of sites that may interest you.

http://agecon.uwyo.edu/Marketing/mngtcmkt/PricDetr.pdf

http://www.gipsa.usda.gov/pubs/captive_supply/app_b.pdf Includes many studies with different conclusions.
 

Econ101

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fedup2 said:
I would like to point out one thing that may confuse some. The references to 'futures deliveries'. (and feel free to correct me if I am wrong) There are no deliveries in the fed cattle market as it is cash settled.

Here are a couple of sites that may interest you.

http://agecon.uwyo.edu/Marketing/mngtcmkt/PricDetr.pdf

http://www.gipsa.usda.gov/pubs/captive_supply/app_b.pdf Includes many studies with different conclusions.

Thanks, fedup2. Same thing on almost all commodity futures markets whether in ag. commodities or not. They are just a ficticous trading tool used to hedge against market conditions as a factor of the time period. Futures prices always converge with cash prices as the time period decreases until at the present, then they are statistically the same. This still allows for movements of price. Sometimes you get it right, sometimes a little wrong. These should average out to be zero or statistically unimportant.

It would be interesting to look at some of the issues in some of these reports on a separate thread in a discussion that had no name calling.
 

fedup2

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Econ, you write "It would be interesting to look at some of the issues in some of these reports on a separate thread in a discussion that had no name calling."

It would be nice but, it doesn’t seem to matter what the heading of the thread reads, previous bias always seems to spill over. Its like a couple of guys fighting in a bar. You try to break it up and get kicked in the head for your efforts. Now I figure, the hell with them. Let them beat the hell out of each other if that’s what they want to do. Same with this forum. Have at it! I hate to see it spill over on a good thread, but I know its going to happen.

What amazes me is the amount of knowledge and information available here and how it is wasted on those fights. There are several topics that have been fought over for months. Nothing new has been added. When posters resort to degrading & name calling those that believe differently, the conversation is over. They have nothing more to add.

It all boils down to respect! If one doesn’t respect the poster he/she is disagreeing with, they should at least respect the others in the discussion. They might reach a conclusion that works for all or at least agree to disagree and move on to something else. Now before I get accused of being ‘forum police’ I going to move on to something else! LOL!
 
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Anonymous

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There is no respect deserved for those who spread misinformation without one iota of fact to back their opinions. The name calling and discrediting has gone both ways at this site forever. Nobody has the high moral ground there although some would certainly like to believe that they do.

Fedup if you want hand holding posts I'd suggest the coffee shop! Nobody has a gun to your head forcing you to read repetitious posts and your critique falls on deaf ears.

The popularity of this site is based on the fact that you get both sides of the issue to where you can conduct your own research and see for yourself who can back their position and who can't. The negativity goes right along with it much like political campaigns. If you have a question ask. If you need nicey nicey hand holding, find another forum.

This forum is unique in that bogus conspiracy theories will be exposed for what they are. As long as misinformation is presented at this site it will be corrected with factual information. This site will not turn into another blamer's site for conspiracy theorists to tell eachother what they want to hear rather than WHAT THE FACTS WILL SUPPORT.

Who cares what you think of how people post? How people post is just a diversion from what they post.


~SH~
 

Econ101

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~SH~ said:
There is no respect deserved for those who spread misinformation without one iota of fact to back their opinions. The name calling and discrediting has gone both ways at this site forever. Nobody has the high moral ground there although some would certainly like to believe that they do.

Fedup if you want hand holding posts I'd suggest the coffee shop! Nobody has a gun to your head forcing you to read repetitious posts and your critique falls on deaf ears.

The popularity of this site is based on the fact that you get both sides of the issue to where you can conduct your own research and see for yourself who can back their position and who can't. The negativity goes right along with it much like political campaigns. If you have a question ask. If you need nicey nicey hand holding, find another forum.

This forum is unique in that bogus conspiracy theories will be exposed for what they are. As long as misinformation is presented at this site it will be corrected with factual information. This site will not turn into another blamer's site for conspiracy theorists to tell eachother what they want to hear rather than WHAT THE FACTS WILL SUPPORT.

Who cares what you think of how people post? How people post is just a diversion from what they post.


~SH~

SH, like many things you post, that was uncalled for. Your name calling, I would agree with Fedup2, is your biggest diversion. It also shows your maturity.
 
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Anonymous

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Oh listen to you Mr. high and mighty. You can't even make a post without some feeble attempt to discredit me. Save your self righteousness for someone who can't see you for the phony you are. I don't care what you think of me. What matters is the fact that you cannot contradict anything I have stated with facts to the contrary. I could care less about your popularity contests.


~SH~
 

fedup2

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SH "Fedup if you want hand holding posts I'd suggest the coffee shop! Nobody has a gun to your head forcing you to read repetitious posts and your critique falls on deaf ears."

I agree that no one is holding a gun to my head making me read your posts. I would also like to remind you that it works both ways. Maybe you should skip mine?

SH: "If you need nicey nicey hand holding, find another forum."

I like this forum SH. Gee, do I really have to go? LOL

I never asked for, nor expected any respect from you SH. Have a nice evening.
 
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Anonymous

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Fedup,

You don't care for my posts and I don't care for your opinion of my posts. Glad we reached an understanding. You have a nice evening. If you have questions on industry issues, just ask. I'll respond in kind.



~SH~
 

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