Have been trying to find the reason the corn, bean and wheat markets have dropped for three days in a row, corn is down about .25, beans .40 and wheat about like corn or a bit less. Could be a short term correction for the last 6 weeks rise. Lot of farmers here like to lock in there corn needs for their herds and in this market that gets tough with milk prices still borderline break even. The price of corn and beans impacts almost all of the by-product commodities as well so it gets tricky when things are moving up and down like they are now.
Bryce
Well this is just theory and mine at that. But the commercials buy a lot of contracts. When you or I buy 1 or 2 contracts we don't even move it off the tic. But when someone puts in huge orders they don't always get their fill without making the price go up (if buying) so they cool it til some other possibly hedger or speculator is willing to bet the price will go down then try to buy under the market and they want the price to go down so they can get their buy orders filled. The speculator that's just shorted wants it to go down and he may just be day trading and he is going to buy before the close. They help keep things liquid so people get their fills. Sometimes the big guys will just sell or buy a good amount just to see how the market absorbs it, and make their decisions on that. Many esp. smaller fundamentalist don't get too technical and just buy or sell and hang on and if it goes against them will just answer the margin calls and ride. Most are speculators 1st hedgers 2nd. So if it gets too bad at least they are covered by some solid goods or need.
The market has to move back and forth or the big lots can't get theirs fills at a price they like. The big commercials do their own crop surveys and don't have to rely all on gov reports. Used to the pig reports always showed how little the gov knew. Of course due to great powers from above there is no longer a live hog market.
When a market makes its resistance from short covering then its weak or if it makes its support by long covering then its weak. The covering phase causes the market to feed on itself, and such fundamentals as weather and demand can be the spark that sets off that unraveling.
And to close, gambling can can be disastrous for the loser and great for the winners.
Its the houses job to convince the producers to hedge their products and faithfully pay those margin calls. Its for the producers protection (high insurance sometimes)and the commercials get to trade their crops without even owning them.
So maybe a little rant. I do love to talk markets and do not mind debate in any way, I realize its way bigger than me.