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Leesburg, Ohio | Dlerwick: my response to some of the points you make:
1. You seem to think that the futures market should serve some type of market smoothing function. I have never heard of that theory before, and although it seems many would like less volatility, I for one beleive some volatility is a very good thing, for without the lows, we would have no opportunity to have the highs. Just because there is volatility, that does not mean that price discovery is not happening as it should. Prices CAN BE volatile! Be ready for it!
2. There are many factors that affect basis, and fuel/transportation costs is only one factor. I do not ever remember reading or hearing from any market "authority" that basis is only transportation, although transportation is often used as ONE EXAMPLE OF the many things that can make up the basis bid. Basis can change drastically according to local demand, independently of the underlying futures. I do share a concern about the basis and the futures not "coming together" at the close of the contract month, but I assume you know there would always be some basis difference until the closing moment of the contract, even at the futures delivery point.
3. Who says there should not be X number of limit moves in a certain time period?? Just because there are limit moves that you or I maybe cannot explain or justify based on our own knowledge or knowledge we can obtain, does NOT mean those limit moves are not justified in the marketplace.
4. I share your opinion that many USDA reports are inaccurate. That can be frustrating, and many people seems to think it is an overriding factor causing the market to be "wrong". In my humble opinion, the "market" probably recognizes those inaccuracies, trades through them either way, and still ends up being " correct" in the end. But that is where you and I differ: I am reasonably confident that the market usually works, and you think it does not. I accept that, but I still think I would be very much worse off if I did not have the futures market as one of the tools in my marketing toolbox.
5. I am not saying that every crop HAS to have a futures market to be profitable. I am saying that the major commodity crops/livestock are better served with than without futures.
6. You seem to say that speculation is always bad. You are not alone. But I do not agree at all with that thinking. I WANT specs in the market, for reasons I have already stated. And don't forget, without a good way to offset our market risk, producers are then FORCED to become specs, until we can make a cash market move, which may or may not be available on a timely schedule without the futures market. Without futures, how would the end-user and any middlemen be able to offset risk? And what would that do to the availabilty of cash market bids? Not saying that other risk-transfer mechanisms could not be developed, just saying that I would hope to see what an alternative might look like before dismantling the futures market. I think the un-intended consequences could be huge.
Edited by KDD 5/16/2016 22:16
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Board of trade hater's what is your suggestion?
