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OK, let's try this again; I suppose it would have been better to ask why in
hell is the government paying farmers for any reason - futures exist so
producers and buyers can hedge, locking in a price that's favorable or at
least tends toward eliminating loss. If beans are already too low to do
better than break even, don't grow beans! Maybe if the government wasn't
involved in guaranteeing a no-loss situation, there wouldn't be extreme
surpluses as often as we're seeing. Maybe the government should have done
the same thing for buggy producers when it became apparent that automobiles
would replace them - or perhaps they realized that at some point there
wouldn't be enough storage space for all the buggies. Hey, I know! We could
have paid the buggy producers to not make buggies! There's an idea! Why
don't they try it with farmers? What, they have?!! What a country!
As far as Ira's comment about the exchanges forcing liquidation of contracts
because of some ridiculous excuse such as there are more contracts than
there are beans, I don't get it. Why would the exchanges care? There's a
buyer and a seller - that's all that matters, or there's no contract issued.
I can't see any benefit to an exchange to call in the contracts and prevent
trading - if I ran an exchange and the shorts and longs balance every day,
hooray for me! Let's do some more!
Dennis C.
-----Original Message-----
From: TheGonch <Daniel.Goncharoff@xxxxxxxxxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Monday, March 01, 1999 15:09
Subject: Re: beans, etc.
>What does hedging have to do with subsidies? If you hedge at a price
>which is 'break even', it's still only break even.
>
>Dennis Conn wrote:
>>
>> Ira wrote:
>>
>> Your buying them with your tax dollars. Ira.
>>
>> Oh, well then, I feel so much better knowing that! But now I have
>> another question: why don't farmers use the futures markets to hedge
>> instead of expecting government subsidies? Isn't that why the futures
>> markets were created in the first place?
>> dconn@xxxxxxxxx
>>
>>
>>
>> Dennis Conn wrote:
>>
>> With the current thread on why farmers continue
>> to grow beans instead of corn, two questions come
>> to mind:1)if more soybeans are grown year after
>> year only to be put into storage, how will farmers
>> hope to break even (the price of beans can only go
>> down, unless someone comes up with another use for
>> them)?2) whatever happened to the concept of crop
>> rotation? Dennis C.
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