Death comes to us all. Life's but a walking shadow | Despite his (apparently) tongue in cheek question, the more I thought about it and some of the answers I think that it is a very good question, well worth considering some more and the answers so far haven't fully explored the topic.
I don't believe myself that the "dangling the carrot" rally is purposely orchestrated by any group of entities (I could be wrong) so we need to look a little further. My own starting place is Adam Smith's "invisible hand" and what maybe the real value and function of the pure speculator in any futures market. It has already been pointed out End-users have no incentive to bid the market up and producers have no way to make it happen without buyers.
One plausible way for the market to rally in the spring long before any seed is ever planted is that future speculators recognize that if farmers don't have enough incentive to plant there will eventually be a short supply. With that in mind the speculators start buying. other speculators see the price start to rise and step in to buy also. Farmers see prices at which it is reasonable to hedge some part of their future crop and start selling and so on and so on until the "market" meaning the sum total of all the participants decides that there is enough bought at a high enough price. The early speculator entrants can now either cash out or hold for a weather rally.
Meanwhile some of the larger end-users recognize that they need to get some of their needs bought and step in, witness JonSCKs' advanced sales.
So maybe those "damn" speculators have some purpose in life beyond their own greed after all. But don't tell them that. They provide the push to get the market going and the liquidity to help keep it going until it finds its natural level. What would Agtrader think if he learned that he might actually contribute to the greater good. Horrors!
For what it's worth and waiting for the rebuttal.
Edited by 1234 1/26/2014 07:55
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Alberta Farmer's question: Who orchestrates .....
