Dear fellow traders, I am an equity trader but recently got quite interested in trading futures. I have so many questions and thought that this was the best place to ask them. I hope that you can help me. One of my questions is what sources I can use to get spot prices of all of the livestock commodities like lean hogs, feed cattle, live cattle or the other agricultural futures like coffee, cocoa, wheat, soybean, etc. In addition I would like to ask you, if I desire physical delivery, where is the physical commodity going to be delivered? Is it possible to be delivered worldwide? I would like to thank you in advance, I greatly appreciate your help, Kind Regards, Prop Trader
Regarding physical delivery, you have to be a "bonafide hedger" according to the definition. There are specialty futures brokers that can deliver storable commodities, but things like softs generally are only for producers, hedgers, or end users.
well, unless they changed it, anybody can get assigned delivery. Wheat corn and beans are for delivery in Chicago. spot prices vary from locality to locality check out agweb.com I only recently started trading ags again, and I'm about ready to get out. In the old days it was just Cargill and the Soviet Union. But now it's Goldman Sachs, and those boys are smart, and I don't like the idea of buying from them when they are selling. Check out price moves in DEC corn. Supply and demand and weather explains some of it, but more of is explained by Wall Street. I'm gonna go learn forex where a little guy still has a chance. I'd rather trade against the Federal Reserve and the Bank of Japan than Goldman and JP Morgan.
Like I said, I don't know if this is still the way they do it, but if a client got assigned, you called them up and told them their 50,000 bu of wheat was sitting up at Acme Elevator and ask them if they wanted to pay storage or just finally sell it.
also check out www.agrimoney.com It will give you a very different non U.S. perspective of the markets and http://af.reuters.com/ go to investing then agriculture Africa is where it's at if you're China and have to import
Thank you guys, You have been great and helped me a lot. It is a whole different game an I need to do a lot of reading and learning before getting more serious about it. I don't want to give my money to GS I wish you all success in your trading. I greatly appreciate your help, Kind Regards, Prop Trader
Unless you have pledged credible 'bonafides' with your clearing firm ( that is, legitimate commercial grade infrastructure and capitalization to take or make delivery ), your FCM will offset your position unilaterally into first notice day. When you pledge 'bonafides', you are essentially giving the FCM a legal lien on your infrastructure in order to settle the position physically. Unless you are a HF, private equity group, or IB who purchased and pledge assets, this is a silly discussion in terms of some retail guy over at IB getting delivered into a futures contract. That FCM will offset it with EFP in the OTC market and nail your ass with the associated fees. Review your clearing agreement - it's right in there.
well, that's what I mean, you don't end up with a car of corn on your front lawn, it's all paperwork and like you said, you get nailed with fees.
Well, the point is, if you are a retail spec account you are not going to get delivered. If the FCM waits until first notice day to unilaterally offset your position without your consent or approval the fees are substantial. And perfectly legal.
and it's up to the broker to inform the client in the most cheerful voice that his (or in my case her) fees are going to be substantial.