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In the meantime I am facing a loss of 31% on my wheat ETF. When Russia invaded Ukraine it was said everywhere how much it was going to affect the price of wheat

In the meantime I am facing a loss of 31% on my wheat ETF. When Russia invaded Ukraine it was said everywhere how much it was going to affect the price of wheat. I guess there are better speculators than me that can influence media and create a buying sentiment. I also deserve it, not only I learnt a lesson, but there's something fundamentally wrong about speculating with food. For some reason I didn't even think about that and at some point I was like what am I doing?

rout39574 3y ago
Bravo on the ethical double-take. It's hard. If you're so inclined, I'd like to hear your speculation: would you have found that second thought as easy if your wheat ETF were _up_ 31%?
ManuelKiessling 3y ago
Well I assume it was solidly in the plus for a while? If yes, then the assumption was right at least for a while — which might be just another instance of market timing working out or not working out.
chrisco255 3y ago
The lesson in the first part of your comment is very important, but the second paragraph is a miss: "there's something fundamentally wrong about speculating with food". Absolutely not. Besides being one of the oldest types of speculation, speculation on food provides farmers with a guaranteed sale price for their product months in advance. Without futures contracts speculation, farmers would have to assume ALL the price risk. And more of them would fail as a result of market fluctuations. As it stands, the futures markets allows for expansion of finance and insurance in the industry, which ultimately improves stability in the entire food supply chain.
- antonvs 3y ago
  The issue is more whether the profits from an activity like that are reasonable. One could imagine taxing such profits at a much higher rate, just to pick a simple change that’s compatible with the current system.
  - SuoDuanDao 3y ago
    But price discovery is a public good.
    - antonvs 3y ago
      Sure, but what’s its value? It doesn’t make sense to compensate people for significantly more than the value of the work they’re doing.
      - SuoDuanDao 3y ago
        Maybe we should set up a market to discover the fair price of price discovery. Oh wait, that's the derivatives market.
  - chrisco255 3y ago
    There is no objective formula for determining what is reasonable. That's an entirely subjective thing. Everyone tries to buy low and sell high for anything they produce. A manufacturer will try to get the cheapest price for all of the raw materials that goes into their goods and they will try to charge the highest price they can. They are only ever kept in check by competition and alternative choices in the marketplace. And the market functions to regulate profits by producing more supply whenever there's an imbalance.
    - antonvs 3y ago
      The market is not the only possible judge here. Anyway, I didn’t say anything about objectivity. Of course “reasonable” is subjective. But if we have some basic values, we can make objective judgements about what furthers those values and what doesn’t. For example, we could decide that it’s not conducive to an equitable society to allow single individuals to make and keep billions of dollars on some small number of trades. And in fact, that was the case for decades before Reagan cut the highest marginal tax rate from 70% to 28%, which directly led to staggering inequality today. Modifying what the original commenter said, there’s something fundamentally wrong with profiting massively on speculation with food.
deleted 3y ago
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diebeforei485 3y ago
> When Russia invaded Ukraine it was said everywhere how much it was going to affect the price of wheat. The UN, and large wheat-exporting countries, took action here. For example, exports of wheat through the Black Sea were prioritized. Fertilizer export and transport was fast-tracked around the world. Wheat-exporting countries said they won't sell to traders, only directly to other governments. It took a lot of effort (which didn't get a lot of media publicity) to prevent a wheat shortage.

rout39574 3y ago

Bravo on the ethical double-take. It's hard. If you're so inclined, I'd like to hear your speculation: would you have found that second thought as easy if your wheat ETF were _up_ 31%?

ManuelKiessling 3y ago

Well I assume it was solidly in the plus for a while? If yes, then the assumption was right at least for a while — which might be just another instance of market timing working out or not working out.

chrisco255 3y ago

The lesson in the first part of your comment is very important, but the second paragraph is a miss: "there's something fundamentally wrong about speculating with food". Absolutely not. Besides being one of the oldest types of speculation, speculation on food provides farmers with a guaranteed sale price for their product months in advance. Without futures contracts speculation, farmers would have to assume ALL the price risk. And more of them would fail as a result of market fluctuations. As it stands, the futures markets allows for expansion of finance and insurance in the industry, which ultimately improves stability in the entire food supply chain.

antonvs 3y ago
The issue is more whether the profits from an activity like that are reasonable. One could imagine taxing such profits at a much higher rate, just to pick a simple change that’s compatible with the current system.
- SuoDuanDao 3y ago
  But price discovery is a public good.
  - antonvs 3y ago
    Sure, but what’s its value? It doesn’t make sense to compensate people for significantly more than the value of the work they’re doing.
    - SuoDuanDao 3y ago
      Maybe we should set up a market to discover the fair price of price discovery. Oh wait, that's the derivatives market.
- chrisco255 3y ago
  There is no objective formula for determining what is reasonable. That's an entirely subjective thing. Everyone tries to buy low and sell high for anything they produce. A manufacturer will try to get the cheapest price for all of the raw materials that goes into their goods and they will try to charge the highest price they can. They are only ever kept in check by competition and alternative choices in the marketplace. And the market functions to regulate profits by producing more supply whenever there's an imbalance.
  - antonvs 3y ago
    The market is not the only possible judge here. Anyway, I didn’t say anything about objectivity. Of course “reasonable” is subjective. But if we have some basic values, we can make objective judgements about what furthers those values and what doesn’t. For example, we could decide that it’s not conducive to an equitable society to allow single individuals to make and keep billions of dollars on some small number of trades. And in fact, that was the case for decades before Reagan cut the highest marginal tax rate from 70% to 28%, which directly led to staggering inequality today. Modifying what the original commenter said, there’s something fundamentally wrong with profiting massively on speculation with food.

deleted 3y ago

[deleted]

diebeforei485 3y ago

> When Russia invaded Ukraine it was said everywhere how much it was going to affect the price of wheat. The UN, and large wheat-exporting countries, took action here. For example, exports of wheat through the Black Sea were prioritized. Fertilizer export and transport was fast-tracked around the world. Wheat-exporting countries said they won't sell to traders, only directly to other governments. It took a lot of effort (which didn't get a lot of media publicity) to prevent a wheat shortage.