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| Things like the butterfly effect only work if a system is very very sensitive. Clearly a butterfly flapping it's wings will not cause a tornado in texas - there is no such sensitivity. However, it's these sensitivities that we are hunting for because they can be predictive. It's like climate science were they defined a sensitivity before understanding if it really is, so there is very little predictive benefit (fortunately or unfortunately depending on your opinion).
When grains were more governed by supply and demand for the actual grain, it was much easier to predict outcomes. There was far less volatility as well since there were few surprises (ie. a 5 cent move would be earth shattering in those days). Now traders have other things to think about that tend overshadow the basic fundamentals of the grain trade. A hedge fund becomes imbalanced between some stocks and grains and suddenly changes their positions. If it's enough money the market moves and the only fundamental is a relationship between unrelated things.
In the end people still do the trading so there is some level of predictability based on human behavior. We just don't have those hard facts that could be used to make longer term predictions. I guess I thought the grain fundamental story was ending when sometime after 2008, bearish reports would come out and the market would move 50 cents up - not just questioning the report (small move down or up), but pretty much ignoring the report because something else mattered more.
In an earlier post I suggested (or indicated to use political speak) that us farmers have lost some of our ability to set a bottom in the market by stopping sales. While this may be true for the flat price, basis is still a player. Unfortunately, with this level of volatility I'm not sure basis does a good job of making up the difference.
Edited by Pat H 9/14/2017 09:08
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10,000 coin flips. . .
