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> [1] If commercial hedgers by definition always have a neutral market
> position (i.e. long the cash market/short futures or vice versa), then
> why is their buying/selling activity useful information? Theoretically,
> they really shouldn't *care* where the price of soybeans goes. I
> thought the entire purpose of the futures markets was to transfer the
> risk from hedgers to speculators. Now why then would it matter if ADM
> was buying 1000 corn contracts if the purchase is just as a hedge?
It means they sold some corn to a customer. IF, and IF it is a new and
unexpected customer then it represents corn leaving the balance sheet on
the S&D, which tightens supplies and should lead to higher prices. Also,
customers tend to move as a herd, once one starts buying, they all tend
to go.
>
> [2] From what I've seen, the vast majority of commodity funds have
> dismal performance. If this is true, why should we want to follow their
> activities?
If you can determine if they are net short (or long) from the
commitments data, once they start to cover a position they can really
move a market, especially if they reverse.
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