Death comes to us all. Life's but a walking shadow | My response was in reference to the large commodity traders and how they use the selling patterns of producers to "slip out the back door" extracting profits as they go. If you follow the COT disaggregated futures you can literally watch it happen. As producers sell grain in the fall & merchants sell their short hedges the large commodity traders simply transfer their accumulated short futures to the merchants. You can watch the number of short futures in the Managed Money, Other reportables & non-reportables columns decline as the number of short futures in the commercial column increase the corresponding amount.
If the merchants weren't there to take these short futures off the hands of the traders, the traders would be forced to go back into the market place and buy back their futures. Other traders would understand that the position they were in and bid up the asking price, maybe not as high as the original selling price but certainly higher than the current low price.
As to your question. Of course, producers need to sell some grain in the fall, but not necessarily the 4-5 billion bushels they normally do, just to get it out of the fields. In my case, for instance, (and probably many other's) I forward contract enough to cover my cash flow needs at least thru mid-winter. But then again, I don't have payments on a new combine and vacation home in the Bahamas either. |
Big Traders Made MONEY Last Quarter Goldman
