One commodity trader writes in with some very unique observations. From trader "Peter"
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The insanity has now fully spilled into the commodity markets – a market which I professionally made a transition to after the 2008 crisis from the financial markets, simply because I believed it was a market that would still function according to true fundamentals…
I guess that only lasted so long…
The commodity markets have been prone to excessive speculation for years, but at the end, the thought of specializing in something “tangible” that EVENTUALLY would have to revert back to true supply and demand fundamentals made all the sense in the world. Specially with the true circus that the financial markets have become since 2008…
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From: XXXXXXXXXX
To: "Peter"
Sent: Wednesday, April 20, 2016 1:35 PM
Subject: volume totals today
774K of soybeans traded today and that would be a record by nearly 160K contracts as yesterday set the record at 615K.
Over 88K Jly/Nov traded today and 97K May/Jly traded. Unheard of non-roll numbers.
Meal volume was 270K and we have to think that was a record as well but not 100% on that one.
Lots of ideas around to try and explain the move: from commercial short hedgers blowing out, Chinese pricing, product switching from Argentina to the US.
Not really sure if all or any of this is true but it was quite a wild session
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From: "Peter"
Sent: Wednesday, April 20, 2016 2:41 PM
To: XXXXXXXXXX
Subject: RE: Some staggering volume totals today
Man… I would be VERY surprised if this was due to any of the reasons people are mentioning…
Chinese pricing – I am very positive it does have something to do with it, but for the overnight session – not the daytime.
Commercial hedgers blowing out – very possibly adding to the mess – but no way commercial volume takes us to these levels of ridiculousness in total volume…
Product switching from ARG – yep, because we REALLY need to ration our 400+ mb bean stocks… LOL
This is way past insane, ridiculous, etc…
The “fundamental” reasons people are trying to ping to this are simply a nice “window dressing”…
There is nothing else that can explain this other than you know what?
Here comes my Very-REAL Conspiracy Theory: the stupid FED and other Central Bankers around the world acting in unison to artificially raise inflation so that they can hopefully get out of the F’ing mess they got themselves into with this low/negative rate BS. Call me crazy, and I am not a “conspiracy theorist” – but what is happening has absolutely no “reasonable” explanation. So I have to think outside the box…
The FED and other Central Banks have already destroyed the equity and other macro-financial markets… it is now turn for the commodities markets…
I am serious … I really am… I wish I was just being sarcastic… but pause for a moment and think about what is written above…
What explains the move in Crude? Ok, I could try and put some sort of “rationality” on the initial move from $26 – $40 (as crazy as it was), but the action in the oil market since Sunday’s “about face” in Doha? No way anything other than pure, simple and outright manipulation can explain these last 3 days of action in the crude oil market… nothing…
How about the fact that the main drag on the inflation figures has been what? What? FOOD & ENERGY…
So is it so crazy to think that Central Bankers all got together in early 2016 and came up with the following equation???
ARTIFICIALLY RAISE COMMODITY VALUATIONS = HIGHER ARTIFICIAL INFLATION = CLAMORING FOR RATES TO BE RAISED = CENTRAL BANKS HAVING A “SUCCESSFUL” END TO THE CLUSTERFCK THEY GOT THEMSELVES AND THE REST OF ALL OF US INTO WITH THEIR “ZIRP” AND “NIRP” EXPERIMENTS…
Who or what has the power to produce such volume in such short amount of time?????? Not the powerful Chinese, not the commercials, not even the “regular” hedge fund crowd… This is much bigger than that Chris… much bigger…
When you pause and think about what I just wrote – it will not sound that crazy after all…
I truly wish I was joking…
I also wish I could let go of my natural makeup of focusing on “fundamentals” and just go long everything… but I don’t believe I can… and I am frankly and idiot for it…
Don’t write this off as some crazy conspiracy… Think about it… it is almost scary how much sense it makes…
At the end of the day… it is what it is…
Peter
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