By Chris Lehner
Sept. 1, when U.S. commodity exchanges are closed, a whole hog barbecue and prime beef steak dinner will be held on a working farm about 75 miles west of Chicago.
It is to honor the largest individual traders and large speculative funds including index, proprietary and algorithmic groups of 2012/2013. The timing of the event also corresponds to the start of the USDA new crop year for corn and soybeans on Sept. 1.
Grain, feed and livestock associations, along with commodity exchange officials will meet with trading managers and Commodity Trading Advisors (CTA). It will recognize traders with awards and honorariums who have been selected as the best of the best traders for agriculture in the US and around the world. The large funds and speculators were picked from those most often listed as the largest and most active on the Commodity Futures Trading Commission's (CFTC) Commitment of Traders Report (COT) for maintaining bullish positions and trading from the buy side. The top traders arrive from Geneva, Switzerland, Beijing, China, Amsterdam, Buenos Aires, Argentina, Frankfurt, Germany, Brasilia, Chicago, New York and Seattle. Small and large agricultural producers from across the U.S. farm belt representing grains and livestock also will have the opportunity to meet face to face with the traders and world renowned fund managers. Several fund managers from international firms have been invited to visit and stay on farms and feedlots in the Midwest.
Although funds have been liquidating and moving billions of dollars out of U.S. commodities over the past year, recent Commitment of Traders reports show funds are an integral part of the day to day movement. As of Aug. 13, from the Commitment of Traders report, the managed money funds added to their long soybeans by 3,597 contracts and cut their short contracts down 3,339 contracts. Cattle producers are especially pleased with funds buying up long contracts by a whopping 17,450 contracts. Unfortunately, not all is rosy. Funds did increase short corn contracts by 10,149 contracts to a position of short 123, 221 contracts.
Before I hear from readers, especially farmers angry over the "embracing" of funds, I need to stop. I have been having a little fun writing as I am sure most of you realize. There isn't going to be a gathering of traders on a farm. It isn't a bad idea, but as far as I know nothing has been planned.
Over the past decade, more index funds or hedge funds have been a very strong part of commodity trading. The Index Funds have been buyers having as few as four or five various commodities in the mix to make up their index to having 100 or more with commodities and at exchanges all around the world. Brokers often sell Index Funds to investors as hedges against inflation. As the price of grains, livestock, metals, energies and any commodity consumers or industries used moved higher, the funds gained in strength. A similarity to an Index fund can be compared to the Consumer Price Index.
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