You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Stuck in understanding futures vs cash markets.... Help :)
- Thread starter capitalistsmith
- Start date
Quote from oldtime:
keep in mind Cargill did just the opposite, they bought in the futures market, and when they take delivery, they sell their long contracts, so there are always plenty of buyers and sellers. (not to mention all us little guys that are trying to get flat.)
Does anyone ever just buy straight out of the cash commod?
Or do co. like Cargill usually purchase (god knows how many contracts lol) in the futures, then liquidate them before expiry?
Do they ever do it the other way around? (maybe a dumb question)
yes, everyday all over the world commodites are bought and sold in the cash market. And keep in mind, there is no "ONE CASH MARKET" it is all local.Quote from capitalistsmith:
Does anyone ever just buy straight out of the cash commod?
Or do co. like Cargill usually purchase (god knows how many contracts lol) in the futures, then liquidate them before expiry?
Do they ever do it the other way around? (maybe a dumb question)
So wheat in Ohio may be priced different than wheat in Michigan.
But IMHO, these attempts to eliminate speculation in oil will only cause prices to be more volatile. I wouldn't want to be a big refinery and just have to take my chances in the cash market everyday. When the boat comes in the price goes down. When the boat sinks the price goes through the roof.
Although I admit it has gotten a little out of hand. We have lived with position limits in wheat for longer than I have been alive, and that has served us well. So you can put me down as being pro speculation but not anti position limits.
it gets a lot more interesting when you try to start wrapping your head around S&P futures.
For instance, it you are a large mutual fund, and your charter demands that you stay fully invested, what do you do if you know you need to sell to cover fees, and protect yourself against withdrawls (especially each quarter at estimated tax time)?
the futures allow you to sell on your terms at prices which for you are favorable
For instance, it you are a large mutual fund, and your charter demands that you stay fully invested, what do you do if you know you need to sell to cover fees, and protect yourself against withdrawls (especially each quarter at estimated tax time)?
the futures allow you to sell on your terms at prices which for you are favorable
You`ve been really kind and helpful bud. Same goes for anyone else contributing on this thread!
I obviously need to wrap my head around the futures markets for sure. I feel I understand the logic in it, but I wanted, as you`ve kindly done, is speak to me in laymans terms.
From my understanding wheat has a price limit per day? Is this correct? If so, what and does it apply to agr commods only and how does this work?
When you`re referring to locals you`re talking about the pit traders, isnt this a dyeing `art` and irrelevant if it is or it isnt, our future prices on wheat are purely speculative in locking in prices as a hedger to be more cost effective and profit as a trader, but when locking in prices as a hedger and agreeing on purchasing the underlying asset, can you choose where you get your stock from?
If I were to sell my futures contract and then buy the cash, this being done through a broker > local why are the prices different depending on the place they`re traded :s?
Im sorry for asking too many questions! let me know if its too much!
I obviously need to wrap my head around the futures markets for sure. I feel I understand the logic in it, but I wanted, as you`ve kindly done, is speak to me in laymans terms.
From my understanding wheat has a price limit per day? Is this correct? If so, what and does it apply to agr commods only and how does this work?
When you`re referring to locals you`re talking about the pit traders, isnt this a dyeing `art` and irrelevant if it is or it isnt, our future prices on wheat are purely speculative in locking in prices as a hedger to be more cost effective and profit as a trader, but when locking in prices as a hedger and agreeing on purchasing the underlying asset, can you choose where you get your stock from?
If I were to sell my futures contract and then buy the cash, this being done through a broker > local why are the prices different depending on the place they`re traded :s?
Im sorry for asking too many questions! let me know if its too much!