Farming Message Board - Msg: 24413754

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Non-Tech : Farming

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To: Ish who wrote (602)	3/17/2008 4:17:51 PM
From: Tommaso	Read Replies (4) of 4450

No, I meant to ask if anyone knew by how much the theoretical value of outstanding futures contracts for grains exceeded the actual value of the crop being traded. I can't seem to Google this up. Most futures contracts are for imaginary commodities. I did come across a figure in Jim Rogers's book of something like 3% representing the actual value of the commodities that are finally delivered. Very few people buying or selling contracts have any intention of taking delivery or making delivery of the actual commodity; they are just gambling on the price change. So that for today, when all the grains were locked limit down in price, it didn't mean that suddenly there was any more grain for sale; it just meant that speculators were either bailing out of long positions or creating short positions. I don't pretend to have much of a grasp of the futures markets and would never (again) gamble that way. My participation is mainly through DBA, representing an interest in corn, soybeans, wheat, and sugar. And I own the DBA stock outright or with only a small temporary margin loan. I think the prices are headed on up for a while--maybe for several years. In any case, I'd rather own an interest in grains than in paper dollars.

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