SE IL | 1234 - 8/14/2013 06:17 I was considering the chart of Dec corn(with open interest and vol. attached) below and thinking about what it means, trying to put it into context. Supposedly it tell us what someone is willing to sell and correspondingly willing to buy 5000 bu of corn in Dec. Really, who, producers, endusers? Second the open interest is about 690,000 contracts or 3.45 billion bu or maybe 25% of the crop. And the volume over the past 3 months is in the order of 10,000 contracts per day or (5000x 10,000x90 days) 45 billion bushel or 3 times the crop. So someone bought and sold the crop three times in the past three months. Again who? Finally, the margin for a contract is $2700 on 5000 bu. or 54 cents per bushel or 10 percent or less. My conclusion is that someone with a very nominal interest in the crop has set the price. Discussion?
Perhaps a little history will help shed some light on what the futures market is and why it is even in existence. I did not read the entire article but I think it gives enough info to at least cause the objective reader to use a little imagination.
http://www.britannica.com/EBchecked/topic/222912/futures
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Going to get all philosophical this morning
