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All the trading in corn futures aids in liquidity and price discovery. Things which seem meaningless until you actually try a thinly traded trade and find that
by graeme 5y ago
All the trading in corn futures aids in liquidity and price discovery. Things which seem meaningless until you actually try a thinly traded trade and find that you can lose 30% simply from buying something on the bid-ask spread.
Maybe someday we’ll have a recession caused by excessive leverage in corn futures but so far the activity you mentioned has seemed fairly harmless while producing much liquidity.
- imtringued 5y agoI think you forgot to mention something very fundamental: You cannot transfer physical commodities through digital means. Stocks and money can be transferred digitally. When you want to sell your commodity you do not send it to a central depot that stores all corn. You tell people that they can buy your corn and you deliver it when the commodity future reaches its expiry date. Thus, there is no commodity trade without futures. That excuse doesn't apply to financial assets.