# Markets



## Vol (Jul 5, 2009)

Saw this on Ag.com.

Regards, Mike

http://community.agriculture.com/t5/Marketing/Anyone-watching-the-markets-anymore/m-p/612256


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## rjmoses (Apr 4, 2010)

I started software development in futures (commodities) in 1980. It was something else, barely describable, as to how the markets worked. But, they were true to their stated objective--provide a hedging mechanism that fit between the producer (the farmer) and the buyer (the consumer like the bread company, Kellogg's, etc.). The basic idea was that a farmer could lock in his selling price, a buyer could lock in his buying price and the risk of price movement would be absorbed by the speculator.

Only about 5% of the trades executed where ever delivered. I.e., most trades resulted in a cash loss/gain for a spec. In the 90's, the CME and CBOT got into other things, like foreign currencies and stock indices big time. They also introduced more options trading. The gist was that they wanted to expand their product line.

I started order entry/routing/account management software development in 1983. This was the first step toward electronic trading. A few years later, the CME introduced Globex and the CBOT introduced EOS, both of which were simple order matching systems.

In the mid 90's I introduced end-user online trading, first with dial-up connections, then Internet access, then followed on with electronic interfaces to the exchange systems.

The exchanges had been very reluctant to allow me to interface into their systems, but that changed in the late 90's when some of the smaller exchanges allowed electronic interfacing.

Around the mid-2000's, people started doing more high-speed trading. *And this, my friends, is were I believe the markets fell apart!*

High-speed, or flash, trading took the people out of the market on both sides for several reasons.

1) A lot of people relied on their broker for market insight. A lot of brokers relied on their customers for market information, such as the feeling of what the local crop production might be. This was social networking in the truest sense. Often, farmers would visit their brokers office just for a cup of coffee, sit around and chew the fat.

2) If I am a buyer or seller, I cannot get a better price because a high-speed system will sneak in there and scarf up my bid/offer before it can reach the rest of the world ever gets to see it. This means that true price discovery just plain and simply is no longer available.

I don't want to be considered a Luddite, but sometimes I am truly sorry that I was part of the electronic revolution in trading.

Ralph


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## Vol (Jul 5, 2009)

Great insight Moses! How can we return to the promised land....if ever?

Regards, Mike


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## rjmoses (Apr 4, 2010)

Vol said:


> Great insight Moses! How can we return to the promised land....if ever?
> 
> Regards, Mike


I guessing Pandora's Box has been opened.

Ralph


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## luke strawwalker (Jul 31, 2014)

Aw, h3ll, I gave up on all that "marketing" bullshite when I quit row cropping...

Even then, I was just trying to hit the "sweet spot" and contract half my cotton crop on an acreage basis... (regardless of yield). Sometimes I hit it when the contracts being offered were at or near the high, sometimes not so much... sometimes they wouldn't even offer a contract, because they were almost certain that open market prices would be cheaper at harvest than they were in the spring/summer during "contracting season"... prices for cotton were always highest in the spring just before planting to lull everybody into planting lots of cotton, then as soon as it was up it'd start declining and fall to the lows at harvest to pick it up cheap, since unlike grains there is no "on farm" cotton storage and warehousing it eats up all the profits to be had holding onto it... (seen a guy lose his SHIRT holding cotton waiting for a market rally that was "Just around the corner" that never materialized... ate up half the crop's value in storage before he sold into the spot market at a lower price than he could have gotten at harvest, and not paid ANY storage on it...)

All that marketing crap is just that- crap... it's ALL just gambling... Like I told my BIL-- why bother with all the puts and calls and options and contracts and crap... wanna gamble?? Go to Vegas and put whatever you're willing to gamble with on either red or black and spin the wheel and see what happens... it's all the same... Get it over with in ten minutes instead of waiting around half a year to see if you've won or lost...

I've listened to all these "experts" and "gurus" trying to teach this crap, and they're all snake oil salesmen, IMHO...

Another thing I told my BIL-- "If I could make a fortune with options and trades, I could make a h3ll of a lot more money sitting on a beach in Waikiki with a laptop than I EVER could down on the farm, and not have to deal with the heat and the dirt and expenses and breakdowns and bills and regulations and crap..."

Basically, it boils down to taking what you can get, and paying what you have to pay... I like cattle because I can hold onto them awhile longer, sell bigger calves if that's what the market wants, and put a little more weight on them, or sell smaller and quicker if the money is there... (or if I need the cash). If the prices are down and I think that I can get a little more later on, I can hold onto them awhile without it costing me much beyond grazing (unless it's winter or drought) and see what the market does... If it goes up, good, if it stays the same, meh, if it goes down, that's the breaks...

Same thing with diesel... when I need the bulk tank filled, I order it... couple years back the old folks hit the ceiling because diesel was nearly $4 a gallon when I needed the bulk tank filled to bale hay... nearly a $1000 bill for 250 gallons of fuel. But what can you do?? Go Amish?? Last tank I bought a month or two ago was less than $2 per gallon... I can pick and choose to an extent when to buy, but when you need it, you need it... sometimes you have to bite the bullet...

I quit cotton when it got to where you had to have a 2.5 bale to the acre crop every year to even make ANY profit... Expenses for seed, fertilizer, chemicals, fuel, ginning, etc just went crazy... Basically when it gets to where you have to make a BUMPER crop every year just to break even or make a little, what's the point?? With cattle at least I can control the expenses better... cattle prices are cheap, I can reduce inputs and reduce stocking rates and "go cheap" and wait it out... I've done it before. I've sold calves for $2.30 cents a pound, and I remember them being $0.30 cents a pound when I was a kid...

That's the thing I see... all these bloodsucking speculators in the markets just suck all the profit out of everything nowdays... they don't produce anything, don't do any work, but with access to easy money and some well-placed options they can manipulate the markets and suck all the profits out before the farmer can even get a fair price anymore, when he's doing all the work and taking all the risks... and now it's gotten so bad the markets don't even respond to the fundamentals anymore...

That's how I see it... OL JR


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## glasswrongsize (Sep 15, 2015)

> they don't produce anything, don't do any work, but with access to easy money and some well-placed options they can manipulate the markets and suck all the profits out before the farmer can even get a fair price anymore, when he's doing all the work and taking all the risks


I always said that would be an easy fix...make everybody take delivery at the end of the day. Bought a million bushel of corn? It ain't on paper no more, "so where would you like it dumped, bub?" would put the kibosh on shuffling "paper corn" etc around and driving the price up or down depending on a whim.

73, Mark


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