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To: AllansAlias who wrote (140916)12/30/2001 11:42:48 AM
From: Joan Osland Graffius   of 436258
 
Allan, Re: COT's

My thoughts on commodity futures, i.e. oil, corn, wheat, etc. is that the commercials are buying contracts for delivery and will be long when the price of the commodity is at what they consider a low price for use in production or resale.

My thoughts on the COT's in the S&P, DOW and other index futures, is that the commercials can use the contracts as a hedge against the in house positions. If a financial institution is planning on selling a fair amount of their inventory in stocks, one could hedge these sales with a short position in the futures.

I may be all wet, but it seems to me there is a different motivation for ADM to be long or short futures and Merrill Lynch. There is also an accounting game when commodity companies are buying their commodities cheaper than their inventory. They can book the sales on the least cost lot they have purchased and show a profit. I see the oil and gas companies do this often and is noted in their financial reports.

Just some thoughts, BWDIK

Joan
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