I'm in the county town, and you say I'm a big shot?

Chapter 616 The Four Major Grain Merchants Also Join the Fun

ADMIS is a wholly owned subsidiary of ADM, primarily engaged in agricultural futures and options trading for arbitrage and hedging purposes.

Brad Pitt is a senior trader at ADMIS, with 20 years of experience in futures trading.

In the fourth quarter of this year, the futures prices of agricultural products, whether soybeans, corn, or wheat, were weak and fluctuated within a range, which made Pete feel very bored.

Going long isn't good, and going short isn't interesting either.

Besides the fact that the soybean and corn harvests are already a foregone conclusion in the fourth quarter, there is also a lack of explosive news in the market.

No news, no hype – this is a fundamental rule in futures and stock trading.

However, what needs to be done still needs to be done.

Do data analysis; create trending topics where none exist.
This afternoon, Pete was munching on a hot dog while looking at his computer screen, observing various technical indicators for major agricultural products such as corn and soybeans.

ADMIS has its own market monitoring system that can monitor the amount, flow, and source of funds involved in market speculation. Two days ago, he suddenly discovered something very interesting.

In the main corn contract ZCM1503, some funds from mainland China and Hong Kong suddenly appeared, amounting to about 50 million to 100 million US dollars.

This amount is not large for a super investor like ADMIS, but it far exceeds that of ordinary small and medium-sized investors.

In the past, speculators from Hong Kong and mainland China participated more in the New York and Nasdaq stock markets, or in crude oil, steel, copper, or precious metal futures trading, mainly for hedging and cashing out, and rarely participated in CME agricultural futures trading.

This immediately piqued his interest.

Could it be that China's state-owned enterprises, such as COFCO and COFCO Reserves, have also started to get involved in futures trading?

After two days of analysis, he discovered that it wasn't true.

They are not state-owned enterprises, but rather some private investment institutions.

What surprised him even more was that, in addition to mainland China and Hong Kong, speculators in New York were also involved in the speculation of the ZCM1503 main contract!

Although their IP addresses show New York, the futures accounts they use are registered in mainland China!
These accounts seem to have a tacit understanding, all quietly buying large amounts of ZCM1503 main contract long!

What are they going to do?
This organized action alerted Pete, who immediately reported it to his superior, John Wilson.

After listening to Pete's report and reviewing his analysis, Wilson confirmed that there was indeed a group of Chinese investors quietly going long on ZCM1503!

Although each individual's investment amount is not very large, when added together, it amounts to six or seven hundred million US dollars, which is a force that cannot be ignored!

The question is, what are they going to do?
Wilson, holding his coffee cup, stared at the data on the screen, lost in thought.

Most institutions are bearish on corn futures prices in the fourth quarter of this year!
There are many reasons.

Fall corn production in the US and Brazil met expectations, and the geopolitical crisis triggered by Russia's annexation of Crimea has gradually subsided, alleviating concerns about the US economic outlook for next year.
But what are these Chinese investors suddenly getting involved in here?
Did they receive some advance notice?
The two stared at the screen in silence. Just then, Pete suddenly blurted out, "Could it be that China is going to import a lot of our corn?"

"Ok?"

Wilson turned and stared at Pete.

"According to official Chinese statistics, corn imports were only 230 million tons last year (2013), but soybean imports reached more than 6000 million tons! Now, China's domestic livestock industry is developing rapidly and needs a large amount of feed. It is inevitable that their country cannot meet the import demand."

“Pete, your analysis makes some sense.” Wilson stroked his chin. “But it’s just speculation; we don’t have any concrete information.”

Pete smiled.

"If there's no news, can't we create news? Truth and falsehood intertwine." Pete then pointed to the candlestick chart. "ZCM1503 is currently consolidating within a range, choosing a direction. Instead of letting the market choose, we'll let it choose!"

"Go long?"

"Yes! Increase the buying pressure, and then release the news that China will buy a large amount of corn next year! Drive up the price and sell off!"

"Your idea is not bad. Recently, we have a bit too much corn in our ADM spot market. We can take this opportunity to raise the spot price and sell some of it. But we're not the only major player in the market. Louis from Cargill, I really don't like him!"

Louis is a senior investment manager at Cargill’s investment firm and has a long-standing feud with Wilson.

Actually, the two didn't have any deep-seated hatred; the conflict mainly stemmed from their respective companies.

Although the world’s four largest grain companies, ABCD (ADM, Bunge, Cargill, and Louis Dreyfus), have long dominated the global grain trade, they have fierce competition and conflicts in market expansion, supply chain control, and policy games.

The conflict between ADM and Cargill is particularly intense.

ADM has established its processing chain by acquiring stakes in Chinese grain and oil companies such as Wilmar International, while Cargill has directly invested in companies such as crushing plants in Indonesia to compete for dominance in soybean and corn exports to China.

Hearing Wilson's words, he immediately replied, "We can partner with Louis Dreyfus; they are more interested in trade arbitrage and futures hedging than direct business."

"OK! I'll give it a try."

Soon, the two companies quietly joined forces, and the price of the ZCM1503 main contract began to rise moderately.

Ouyang Shaoqiang's team, located in Hong Kong, was the first to discover the problem. As soon as he arrived at work this morning, Ouyang Shaoqiang immediately called Fang Qingye.

As darkness fell in New York, Fang Qingye pushed Xia He's wheelchair after dinner and took a walk in Jack Fischer Park near the villa, with her daughter riding on her shoulders.

Xia He's leg is recovering quickly, and the steel nails will be removed soon, allowing her to gradually live like a normal person.

Fang Qingye stopped in her tracks, took out her phone, and answered it when she saw that it was Ouyang Shaoqiang calling.

"Mr. Fang, we've recently discovered that large sums of money have entered the market!"

"Going long, right? I've noticed that too. Prices have already started to rise moderately. Can you find out where the funds are coming from?" Fang Qingye asked.

"It's within the US. According to the futures company's trading desk analysis, it seems to be one of the four major grain companies, ABCD, but we don't know exactly which two."

"Oh, they've come to join the fun too?"

“Yes, did they also get some information? These big capitalists have a very keen sense of smell,” Ouyang Shaoqiang said on the other end of the phone.

"I don't know either, but this is a good thing. Let's ignore them and proceed according to our plan!"

"Ok."

Fang Qingye put her phone in her pocket and then pushed Xia He's wheelchair.

This situation is getting more and more interesting.

Phillips of Poughkeepsie also noticed this signal, which was certainly disadvantageous to him.

But he can't worry about that these days, because he has been summoned by the New York District Court and is about to go to trial for reckless driving.

(End of this chapter)