When Can We Start Breaking Things?

[SoFarSoGood]

Hold up... I am not a millionaire or anything but I bought cereal and rice futures a couple of years ago. Why? Because it encourages more people to make more food and as the population is rising food is bound to get more expensive. I didn't know there was going to be bad Russian and American harvests and sure I am now looking at a handy profit thanks. Have I done wrong? Is it wrong to make a profit?

[gaelic cowboy]

Hold up... I am not a millionaire or anything but I bought cereal and rice futures a couple of years ago. Why? Because it encourages more people to make more food and as the population is rising food is bound to get more expensive. I didn't know there was going to be bad Russian and American harvests and sure I am now looking at a handy profit thanks. Have I done wrong? Is it wrong to make a profit?

Eh agri futures are not about encouraging the growth of food in the slightest if they did so then they would rapidly become worthless.

All resource futures be they mineral, agricultural or financial are about protection from any massive price swings or reductions in there availability.



Do you remember that big to do a few years ago on how bio-diesel was supposedly stealing food from peoples mouths, well that was a load of cobblers there was plenty food the problem was the price of it.

A large proportion of that food price inflation was driven by huge speculation in all sorts of resources as to it's future price. (it was felt it would be more tomorrow naturally)

[SoFarSoGood]

Hold on if prices go up then farmers get more and more people think "hey that's profitable" so start growing food. I am not talking about bio fuels.

[gaelic cowboy]

Hold on if prices go up then farmers get more and more people think "hey that's profitable" so start growing food. I am not talking about bio fuels.

Not true in the slightest for farming and even less true for the resource sector as a whole.

Farming is generally a low return high initial investment activity generally people are trying to maximise long term potential. This doesn't sit well with banks so farmers often have problems with obtaining investment and with paying it back in lean years, it literally takes years if not a lifetime to properly maximise the potential of your land and animals.

Basically no one invests in farming because a loaf of bread went up ten cent, far more likely people will invest in the price of the loaf of bread.

[SoFarSoGood]

Thank God people like you don't advise 'evil capitalists' like me who actually keep the world going.

[gaelic cowboy]

Thank God people like you don't advise 'evil capitalists' like me who actually keep the world going.

People who haven't about clue about the relationship between price and value and how the same is influenced by inputs and outputs will continue to feather Wall Streets nest eggs.

Futures contracts don't encourage investment in production it it is not there purpose to do so.

A futures contract is to protect an initial investment position from swings in the price of said resource.

[Vladimir]

People who haven't about clue about the relationship between price and value and how the same is influenced by inputs and outputs will continue to feather Wall Streets nest eggs.

Futures contracts don't encourage investment in production it it is not there purpose to do so.

A futures contract is to protect an initial investment position from swings in the price of said resource.

Agreed. Still, it's wonderful to get into. The problem comes when people start manipulating goods to generate contrived shortages, etc. No harm in normal futures investing.