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Interesting Talk with ADM merchandiser
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tc034
Posted 3/7/2008 16:57 (#328404 - in reply to #328345)
Subject: Re: Interesting Talk with ADM merchandiser


The futures markets were created to allow producers and end users of products to hedge and manage risk, not to be another fix for Las Vegas junkies. How do the exchanges make money? Volume of contracts traded. More traded more money in their pocket. Who creates more volume - producers and end users hedging and holding contracts or day and short term in and out traders. I'm not saying speculation is bad. They (whoever they is) say speculation provides most of the liquidity in our markets. Also spec trading does skew prices too high on the upside hence the wider and wider basis the higher the markets go, ADM and Cargill telling us "We dont care how high the futures price is, this is what it is really worth. I dont know the specific mechanics of it but I think it is all most impossible for producers to deliver on contracts. If we could, that would take care of alot of these wide basis levels. Wasnt there big changes on delivering on contracts about the same time the exchanges started allowing the increased contract limit amounts?

Tom
NE ARK
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