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| keeping in mind i am very wet behind the ears on this futures stuff, but a market this heavily shorted is playing with dynamite (for the shorts) because a farmer with grain in the bin can do nothing with only the interest expense of keeping their 'long position`. whereas maintaining a short position isnt free. i believe sue on market to market said that farmers own 68% of corn still. but if a farmer has corn in his or her bin and that corn is obligated to a ethanol plant or a feedmill, is it still "in the farmers hands? famer will have to deliver #2 corn in the summer, yet its in the farm bin site.
i got this off investorpedia :
https://www.investopedia.com/ask/answers/012915/how-long-can-trader-...
Shorting Requirements
A short position may be maintained as long as the investor can honor the margin requirements and pay the required interest and the broker lending the shares allows them to be borrowed.
While both those statements seem obvious, they are in fact the greatest limitations to an investor's ability to hand on to their short positions. Looking at them one at a time makes this a little more transparent:
Honoring the margin requirements: A rapid rise in the value of the shorted security can easily wipe out the available cash an investor has elsewhere, especially if they've been caught in a short squeeze.
Paying the interest: This assumes that a short, which goes nowhere, can quickly become unprofitable in a rising interest rate environment.
The broker allows borrowing: This can become problematic if companies try to limit the amount of the underlying in circulation. | |
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