Why speculators are good for us

[Fransisco]

Charlie is right, we are all speculators. Anyone with grain in the bin or a crop in the ground is speculating.

Any farmer who thinks speculators are scum should look in the mirror. Imagine, trying to make a profit from other peoples hunger. What nerve, you should be giving all that food away.

[Fransisco]

jen you don't think freedom exists?

You think its just wishful thinking?

Take a look at Hong Kong its economy is 90.3 percent free.

http://www.heritage.org/Index/country.cfm?id=HongKong

Take a look at Singapore, 87.4 percent free.

http://www.heritage.org/Index/country.cfm?id=Singapore

Take a look in your own back yard we are 80.2 percent free. And that's up 2 percentage points from last year!

http://www.heritage.org/Index/country.cfm?id=Canada

The world is not the socialist 'workers' paradise that you have convinced yourself that it is. There is freedom all around you, I'll agree that we need more of it, but to deny the freedoms we have is to bury ones head in the snow.

[Hopperbin]

I did read all this garbage but it was interesting. Just one thing about Wilagro's statement that a person that takes a long speculative position is holding say corn from the market place.
I was thinking about that and in a sense if a speculator was long that would increase the price and ration demand. But also his position must be liquidated on a specific date. So in that sense he has never had physical product, and any product say corn produced will go to market eventually. If his long position results in more corn produced because of better price then he will be adding to supply at a later date. If his long position results in less end users then he will be adding to supply and likely taking a shit kicking when he sells his position. So to that speculator I will offer a bottle of whisky because I as a farmer have had a chance to sell at a higher price.

[Fransisco]

Pickens Says CFTC Probe of Oil a `Waste of Time'

June 3 (Bloomberg) -- A U.S. probe into whether speculators manipulated oil prices up to more than $135 a barrel is a ``waste of time,'' billionaire hedge-fund manager Boone Pickens said yesterday.

The Commodity Futures Trading Commission, the watchdog for U.S. commodity transactions, said May 29 that it was investigating how much of the gain in oil prices was caused by manipulation, as opposed to consumer demand. The investigation has been under way since December.

``There's nothing to it to start with,'' Pickens said in interviews at an American Wind Energy Association conference in Houston. ``That's not what's happened. <b>You have 85 million barrels a day of oil available in the global energy market and 86.4 million barrels a day of demand.</b> So the price of oil is going to go up until you can kill demand.''

Crude oil for July delivery fell 18 cents to $127.58 a barrel in after-hours electronic trading on the New York Mercantile Exchange as of 7:32 a.m. in London. Oil has risen 93 percent in a year. It reached a record $135.09 a barrel on May 22. Some market analysts and members of the Organization of Petroleum Exporting Countries blamed speculators for the price.

``You've got to have a commodity market, because a producer has to have an opportunity to hedge when they feel like the risk is becoming too great for them,'' Pickens said. ``For every hedger, you have to have a speculator.''

Pickens, the founder and chairman of Dallas-based BP Capital LLC, manages funds linked to both energy commodities and equities. Yesterday, he reiterated a forecast, first made in April, that oil will reach $150 a barrel this year.

The CFTC said it's looking into the transportation and storage of crude oil as well as the trading of futures contracts.

The regulator will require more information on index funds and clients involved in swaps deals that are hedged on exchanges, the New York Times reported, citing draft proposals scheduled to be announced today. The CFTC will also issue expanded monthly trading reports from July and reduce the number of waivers on speculative limits given to index funds, the newspaper said.

There will also be confirmation of an investigation into a jump in cotton prices in February and a review of a program to cut costs for farmers hedging crop prices, the New York Times said. The CFTC will also start talks with the banking industry to ensure the farm industry can get credit, the newspaper said.

[Fransisco]

From this mornings market news...


It seems increasingly likely that we will soon see the heavy hand of the government "participating" in correcting the distortions in that sector. Yes, the U.S. regulators want to pass legislation which would be designed to chase the speculative dollar out of the "pits", leaving
commodity futures to the farmer and consumers for the originally purpose
of hedging exposures. Now this is a mighty fine plan I suppose, as long as
the market takes it to heart and behaves in an orderly, market friendly
fashion (as they are so well known to do!) .

My concern is that the "Law of unintended consequences" gets passed in that market too! <b>Let's say they
do pass some sort of regulation banning spec trading or limiting access to the commodities futures markets. What do you think might happen going into that? My guess is they will certainly get lower prices because every speculative dollar will sprint for the exists and every hedger will be pounding any bid before the bids disappear. Commodity prices will
implode</b>(now farmers who can't afford to hedge will have no income to hedge anyway).

The EM countries will grind to a halt as revenues disappear. <b>Then there is the question of where the billions currently in that market might
go.</b> If the commodity market is off limits, my guess is that the first
move will be into Treasuries for liquidity. Stock markets will get distorted as companies currently doing well get dumped and those who require
commodity inputs soar.

Will the rules only apply to "soft" commodities or will energy get covered as well? If so, look for the Loonie to get smoked in a hurry. This is all pure speculation but I hope that the market meddlers consider the full extent of their moves before implementation.

[Fransisco]

Oh yeah, getting all that voluntarily traded speculator money out of the markets is a great idea. I love the thought of a price "implosion" right now.

Before you know it farmers get to go cap in hand back to government to pay the grocery bills just like in jensens world.

[cottonpicken]

Some people even say china has a freeer market than us.(Is freeer a word fran?)

A market can not be manipulated or controlled over a long term.

Reasons the finacial entities of the world(specs,funds,individuals,governments etc,etc)want a piece of commodities.

In no particulair order.

-relestate market is toast,no return or less
-bond market may as well be no return
-stock market no return, less of a return if priced in us dollars
-worlds reserve curreny has lost over 40 some percent of value in the last five years
- globabl m3 is groing at double digit rates
-unfunded us government liabilities north of 53 trillion
-us government budjet shortfalls over 500 billion per year
us government current account defict over 500 billion per year
-growing global tensions
-balloning population growth

last
but
not
least

CHINDIA

[jensend]

geez fran your snide comments reveal even less understanding than your non-snide comments. by the way it's 'au contraire' not 'oh contraire'. i know you're fussy about these things. you're so ruled by some imaginary philosophy that you can't understand or don't want to acknowledge the substance of what i say. just reference melvill's thread about george soros' comments today and compare the reasoning to wally williams simplistic nonsense and wait to see who's right - a chairman of a fund managing $17bn or a hack columnist. you'll have to expand your reading list if you want to understand what's going on in economies today. i'm done with this; have a good day and good luck with your crops.

[Fransisco]

Just read it.

Soros said he is not in favour of more regulation.

The best stuff from Melvill's link comes from Clark McKinley from The California Public Employees’Retirement Plan.

<blockquote><b>“Futures investments of all public pension funds are less than 5 per cent of commodities indexes</b> ... The actual impact in the market is small, a chip in the woodpile,” he added. “The price spikes stem from fundamental supply and demand dynamics.” </blockquote>

He added: <b>“There are many cases of price spikes before any pension fund invested in commodities. There are current record food prices for which there are no futures contracts.”</b>

But they only invest about a billion dollars so they must be a bunch of hacks as well.