Chapter 323 Wealth
The loss of soybean spot and futures markets caused pain to international grain traders.

And for the hot money that has fled from the mortgage and financial markets, it is a heavy blow!
Just out of the tiger's den, and into the wolf's lair!
Unlike international grain traders, these hot money and funds basically do not involve spot trading, and are purely for speculation and following the trend.

That is why buying high and selling low is a common practice, and it is a typical practice of being a loser.

There were also gamblers like AIG, who were long on both the futures and spot markets and suffered greatly in this decline. In order to reduce the risk of liquidation, they were forced to give up their previous profits and even suffered a slight loss.

Fortunately, with the re-release of monthly supply and demand reports by Informa and Oil World, the timely announcement by the Federal Department of Agriculture, and the release of other favorable news such as President Bush's upcoming signing of a new energy bill, grain traders and international funds have taken the lead in counterattacking.

After this combination of measures, the entire market has once again returned to its prosperous state.

AIG's Paulson even led AIG's futures trading department to reverse profits through aggressive leverage and trading methods.

There was still an hour before the night session was about to open, and Paulson walked into the trading hall ambitiously.

The trading hall is bustling with traders busy checking market information from around the world and sorting and analyzing data.

After saying hello to a few familiar friends, Paulson felt that today would be a good day as the market generally expected an increase.

rise!rise!rise!
Beat the shorts!

However, when Paulson walked towards his seat passionately, he was suddenly filled with curses.

"shit!"

"grass!"

"Fuck!"

It seemed like only a few seconds passed before the trading hall was in chaos, with hurried footsteps and urgent phone calls everywhere.

Paulson feels bad!
too familiar.

It felt the same way a week ago when soybeans crashed!
He rushed to AIG's trading desk to see what was happening.

Then it crashed for a moment!
The top of my head seemed to be covered by a dark cloud.

A piece of latest news was pinned to the top: "China's corn production has increased unprecedentedly, with the total output estimated to have reached 2.56 million tons, a surge of 8000 million tons!!!"

"Shit!" Paulson also kept cursing, and then urgently contacted the Information Department to verify it immediately.

But when he saw the reactions of the people around him, he knew that things were going to be bad!
If true, this would be a profound disaster for the world's largest corn exporter market.

Moreover, the main corn producing areas in North America and China are basically at the same latitude, and the harvest seasons are roughly the same.

Paulson looked around the trading hall and saw that the traders who were originally high-spirited suddenly became extremely depressed!

Ruined!
Can it still be redeemed?
Those big shots should have a solution!

...

"boom!"

Albert's anger was palpable. "What is the Ministry of Information for?"

"First, soybean production inexplicably increased by more than 10 million tons, and now corn production has suddenly increased by more than 80 million tons. Is it possible for Cargill to make such a large information error?"

Silent as a cicada!

The people from the Ministry of Information tried to explain.

Albert suddenly slammed the ashtray to the ground.

"Bang!" It was as if it hit everyone's face.

After a while, Albert pretended to be calm and made arrangements: "The Information Department will verify whether the data on Huaxia's production increase is accurate. The Trading Department will keep in touch with the seats and be ready to close positions at any time."

After saying that, Albert made several phone calls on the spot, trying to request that the Chicago Mercantile Exchange be closed!

But closing the market just because of a piece of news is a huge blow to the credibility of the exchange and is absolutely unacceptable to the exchange.

The two sides engaged in a fierce game!

In a corner where no one could see, Albert's hands kept shaking. He panicked for the first time!
The United States has maintained corn exports at 0.85 to 1 million tons for many consecutive years, and has a strong influence on the South American food market.

Coupled with the rapid development of corn bioenergy, the rapid growth of the global population and other factors.

The corn market is bullish all the way.

This also made them a little arrogant. As a grain processor and trader, they had a large amount of spot goods on hand, but they did not choose to establish short positions to hedge their risks.

Instead, we also chose the futures spot market and went long on both sides.

It's not just Cargill that does this. As far as Albert knows, ADM, the world's largest corn bioenergy processor, also operates in the same way.

By going long on both sides, you can maximize your profits once the market goes up.

Once the price drops, it will be a double loss. Coupled with the leverage of futures, it can be fatal!

The more than 10 million tons of soybeans were just daunting. Because Cargill had strong financial resources and proper risk control, it had been replenishing its margin and ultimately did not suffer much loss.

But 80 million tons of corn!

What should I use to fill this?
This is the real disaster!
After the endless debate on the market without any result, Albert hesitated for only a moment before making another call.

Can we create a technical glitch?
Only if a technical failure forces the exchange to close can more time be gained.

However, time is too tight!

There are less than 10 minutes left before the market opens. If we want to create a technical failure, we can only hope for unpredictable luck.

Five minutes before the opening.

The people from Cargill's information department also finally completed the confirmation.

"The first relevant information was released by Grain and Oil Market News, an authoritative grain and oil media in China."

"Then the spokesperson of the Chinese Ministry of Agriculture confirmed that the Grain Bureau also urgently adjusted its production forecast."

"People from the overseas branch have also confirmed it."

"Currently, corn futures at Huaxia Dalian Commodity Exchange have fallen 5.01%, triggering the limit down."

"Previous estimates are likely misleading, and Tianyu No. 1 seed sales have been ambiguous..."

"Don't explain." Albert interrupted: "I just want the conclusion."

"The conclusion is that the authenticity is beyond doubt."

Albert's heart sank, and he looked at another person and asked, "What does the trading department think?"

“Close long positions and open short orders; or join forces with other institutions to fight against shorts!”

"Close the position first." Albert said in a deep voice.

The time is too short, so short that it is difficult to reach a consensus and it is impossible to trust others with your back.

Can only run.

See who runs faster!
"What if the balance cannot be closed?" The head of the trading department asked a soul-searching question through gritted teeth.

When prices fluctuate violently, it is very likely that the price will go down all the way due to the lack of counterparties, or even directly trigger the limit down.

This is an extremely rare situation!
Normally, a drop of more than 1% in a trading day can be considered a big drop.

But 8000 million tons is almost the annual export volume of the United States. Where in the world can we find such a large market capacity in such a short time?

Even if it is processed into biodiesel, the processing capacity is totally insufficient.

When the corn market supply grew without limit and hit the limit down, everyone present thought...there should be no suspense.

“The stop loss point was significantly lowered again.”

Everyone felt inexplicably frightened.

The limit down of corn futures at CME Group is 8%, and the margin ratio is 0.03, which means that the maximum leverage can reach 33 times.

But no one is stupid enough to fully leverage.

Cargill won’t either.

But generally the leverage is at least 4 to 6 times, and a limit down will result in a loss of 32% to 40%.

It is still an unbearable loss.

Some people wondered, "When will China corn be able to influence the trend of Chicago?"

No one wanted to answer his question.

Because, it’s time to open!

Just for a moment,

A huge amount of short contracts hit the market, and the main contract fell by more than 2 points at the opening.

To Albert's surprise, a rival appeared in the market!
Bunge and Louis Dreyfuss? Impossible, these two companies have been hedging and have a large number of short positions!
It doesn’t matter who it is!

Close the position, close the position, close the position!

What are these bulls who are still resisting thinking? Are they crazy?
impossible!

8000 million tons of physical goods are hitting the market, who dares to buy at a high price?
really,

After only a short resistance, the main contract fell sharply again, this time with a direct drop of about 4.5%, and then a confrontation broke out again.

This should have reached the critical point where many accounts would be liquidated.

But, it's useless.

The stalemate lasted less than a few minutes before the main contract moved downward again.

At this moment, I don’t know how many accounts were buried!
Cut losses!

Liquidation!

Liquidation!

Various horrific tragedies continue to occur.

There were no more counterparties in the market, and no more resistance, and the price hit the limit down like mercury pouring out of the ground.

Albert's hands were shaking.

Cargill closed some of its long contracts through its large-scale seats, and also opened some short orders, but also suffered heavy losses.

Less than half an hour after the market opened, several main contracts hit the lower limit.

After the corn futures market hit the limit down, the situation soon spread to soybeans and wheat, and both fell by more than 1 percentage point again.

On this day, countless funds that had fled from the mortgage and stock markets poured into the commodity market and experienced what true bloodiness was!
Albert stood in front of the French window, his right hand in his trouser pocket still trembling slightly.

He stared at the subordinates in the Information Department with sharp eyes, "Now, you can give me an explanation!"

However, instead of waiting for an explanation, he received a call from the director.

Cargill needs someone to take the blame!

...

In half an hour, Paulson seemed to have experienced several centuries.

He is the head of the futures trading department of a financial company under the American International Group and a rising trading star.

Now the position has been liquidated!
This loss was not something he could bear.

He walked into the elevator in a daze and pressed the button to the top floor. There were already quite a few people standing on the rooftop.

Maybe he's here to get some fresh air!

The wind on this summer night is quite cool.

The Chicago Board of Trade Building, also known as the skyscraper, was rebuilt in 1925 and is 45 stories high.

Looking at the bustling city with tall buildings from here, it really has a different look under the starry sky at night.

Someone handed him a cigarette, and Paulson took it. The person who handed him the cigarette lit it for him and asked, "How much did you lose?"

Paulson tasted it in ecstasy and smiled miserably.

Suddenly jumped down.

a long time.

There was a loud noise from the ground.

"boom!"

It was as if Pandora's box was opened, and loud "bang" noises were heard continuously from under the skyscraper.

On this day, countless high-leverage gamblers had their positions blown up in an instant. They walked to the rooftop in a daze and jumped to meet Jesus.

In the early morning of that day, the police, whose sweet dreams were disturbed, were forced to come and strengthen security, cursing and swearing, and even crowds were not allowed to gather in the trading hall.

Informa Economics Company closed its doors overnight, but various clown graffiti were painted on the door.

The media filmed it and reported it, but the owner Hernan Marc disappeared.

However, his old friend Slain Levin, editor-in-chief of Oil World, did not blame him too harshly, as did the farmers and futures companies that suffered heavy losses.

Because Slain has proven through practice that he believes in his own judgment and is a die-hard bull on corn futures, and now he has gone to see Jesus.

The dead are great!
After closing.

Analysts and financial media from all walks of life wrote articles overnight and discussed this sudden collapse on television and radio.

No, venting is a more appropriate description.

"Shit! This is a long-planned conspiracy by the Eastern power!"

"The federal government is like an old, frail, slow-witted man who only realized he was in pain after he fell down!"

"Which bastard suggested that China couldn't feed its huge population? Damn it, now he's trying to compete with our farms for the corn export market."

"8000 million tonnes, that's horrible, it's a disaster for farmers."

"Didn't Monsanto claim that genetically modified seeds have no rivals? What the hell is this!"

"Monsanto is shit. My soybean field is full of weeds that glyphosate can't kill! They said I bought fake seeds or fake pesticides. Fuck that shit!" That night, not only did the traders collapse, but millions of farmers also had sleepless nights.

...

A shadow hangs over America.

On one hand, the subprime mortgage crisis is still worsening; on the other hand, the commodity market is rising rapidly.

The dilemma of economic recession and inflation has put the US federal government in a prisoner's dilemma.

Thousands of people lost their jobs, resulting in reduced family income and difficulty in maintaining normal living expenses. Many families had no choice but to declare bankruptcy.

However, commodities such as food and oil have been rising rapidly, making survival increasingly difficult.

But, when the sun rises on a new day, the people of the Federation suddenly realize that this situation has suddenly changed?
The commodity futures market, which was dancing on the tightrope, suddenly experienced a major earthquake.

Corn futures market hit the limit down!

How long has it been since we last saw each other?
It even directly led to the collapse of the grain commodity futures market. So, is the price of grain going to drop?
Ordinary people were at a loss.

They haven’t felt the impact yet.

But this did not stop them from taking to the streets, holding banners, holding billboards, and even writing various words on their clothes.

...

During daylight saving time, Chicago corn futures open at 8 a.m.

Before opening.

Senior federal officials publicly accused the country across the ocean of not releasing information truthfully.

The federal government has always been good at using authoritative departments such as the Federal Ministry of Agriculture to play word games, release negative news, and cooperate with the main forces to harvest long or short positions.

This time, the other side actually learned it?
Can this be tolerated?
You can't help but curse.

At the same time, it also claimed that it would firmly defend the interests of farmers.

After the morning session opened, the grain futures market did show a rebound trend, with corn recovering first, and then soybeans and wheat also recovering their lost ground.

The federal agencies' propaganda offensive has not stopped.

Professor Paul Errich of Stanford University was a pioneer in warning the public about population explosion and resource shortages.

In an interview, he claimed: "Over the past decade, global food reserves have been at an extremely low level, with less than two months of carryover inventory."

"The rapid expansion of the population in developing countries, especially the rapid economic development of countries like China, has led to a faster growth in food demand than food production."

"This is a global crisis and a long process."

The Federal Department of Agriculture's Foreign Agricultural Service also released a message.

“Huaxia’s soybean and corn varieties are too single, and Tianhe Seeds’ Tianyu No. 1 actually accounts for 47% of the total.

Once pests and diseases are encountered, pesticides will be sprayed on a large scale, causing land and water pollution, and posing a great threat to food production. "

“Therefore, the high growth of Huaxia Grain is unsustainable.”

However, no matter who speaks out from the federal government, the expected increase of 8000 million tons this year is inevitable.

The corn futures market is lukewarm, and the entire grain and oil market has lost its former popularity.

After several trading days of repeated friction, the corn futures contract fell a lot again without anyone noticing.

If calculated from the initial high point, the main contract fell by 32% in less than ten days.

If there are no unexpected factors, this will be the main theme in the next few months until it falls to a price recognized by the market.

……

"Open the sickle, open the sickle!"

At the soybean base in Jinta, Guo Yang gave an order with a smile, and then hundreds of soybean harvesters rumbled and drove into the vast soybean fields.

The soybean harvester is modified from Fengkai's Gushen corn harvester.

At present, the Gu Shen, priced at 9.5 yuan, has become popular all over the country and has occupied a major position in this emerging market.

Guo Yang looked at the soybean field where the plants were not very tall and asked, "Will this modified harvester work?"

"It should be possible, right?" Cai Bin also said with doubt, "Zhao Rang promised me with a pat on his chest!"

Guo Yang thought of the young man with long bangs, "He is the one who developed the corn harvester, right?"

At the end of the day, in fact it took less than a day, just an hour or two, to prove that the machine still had defects.

There are three or four bean pods neatly left on the straw close to the ground, as if... he had a buzz cut?

The harvesting blade is too high, so it’s no surprise that it was originally a corn harvester.

The pod bursting rate is also high, and there is a row of soybeans falling on the ground.

My own land, I don’t plan to rush to harvest vegetables in a season, so I harvested them later and dried them out…

This loss made Guo Yang feel so painful.

In the Northeast, because the losses from mechanized harvesting are too high, some farms and farmers use manual harvesting and drying, and mechanical picking and threshing...

Jiahe is such a large area, so this is the only way to save trouble and effort.

In fact, imported soybean harvesters would also be fine, but Feng Kai took it over for show... Damn, it was you who forced me to curse.

Not long after, nearby farmers came with sacks, ready to pick up the unharvested soybeans in the fields.

Guo Yang frowned, "Cai Bin, find someone to drive the farmers away!"

"Ah!" Cai Bin asked, "We still need the unharvested ones. Do we need someone to pick them up?"

"Do you think I'm stupid?" Guo Yang said angrily, "If someone is caught in a harvester, that would be big news."

Cai Bin was so scared that he broke out in a cold sweat and hurried to make arrangements.

By the evening, Guo Yang received the production data. Nearly 1980 acres were harvested in one day, with a gross weight of about million jin.

The yield per mu is about 495 kilograms.

Guo Yang's face darkened.

In fact, this output is really not low.

But this is Tiandou No. 7, a soybean seed tailor-made for the arid northwest region. The seed store gives a yield of 550 to 650 kilograms.

He boasted to the Agriculture and Forestry Bureau that the yield per mu was 600 kilograms, and at the time he thought it should not be a problem to take a middle number.

Now, snap, the glorious image is gone!
The error must be in the machine collection!
The total loss rate of machine-harvested soybeans in Northeast China is about 10% to 12%. Based on the expected production of 600 jin, Jiahe’s loss rate is about 17.5%. Based on the expected production of 550 jin, the loss rate also reaches 10%.

Guo Yang really didn't expect to fail in this.

Fortunately, it is only the 100 million acres in Jiahe. Ordinary farms and farmers will not choose such mechanized harvesting methods.

The R&D team also made improvements overnight, and with such staggering losses and lessons learned in mind, the efficiency of improvements was astonishing.

The harvest was better and better every day, and the yield per mu increased to 520 to 530 kilograms.

This yield is still extremely high, enough to attract corn growers to switch to soybeans.

At this time, the main corn producing areas have also entered the peak harvest season. Due to the publicity of media and institutions such as the Grain and Oil Market News, this year's corn has received unprecedented attention.

Farmers, planting companies, local governments, grain traders, processing companies, and futures companies are almost all in high spirits.

Some are enjoying a good harvest, some are worried about poor sales, and some are studying prices...

As time goes by, it also proves the fact that this year's yield and harvest are indeed far beyond expectations.

For a while, the purchase price of corn plummeted.

It dropped directly from around 0.72 yuan per catty in the early stage to 0.50 yuan per catty, a drop of 30.1%.

This price is already close to the low of 2005 yuan in 0.48. According to the current trend, a breakthrough is only a matter of time.

Unlike the widespread bloodbath in foreign futures and spot markets, the domestic spot market is a world of difference.

Even at this price, the growers of Tianyu No. 1 can still earn more than yuan per mu, so the profit is still considerable.

For farmers who chose other varieties, the income is between 500 and 800 yuan, and a very small number can earn more than yuan. Most farmers are lucky enough not to lose money.

This led to a two-tier split in Tianhe’s reputation.

Some gamblers who were desperate because of their losses in futures spread rumors everywhere, saying that Jiahe manipulated the information and caused this tragedy.

But the corn processing market is relatively stable.

Corn processing companies generally go short in the futures market for hedging purposes.

The price of corn fell, and the inventory on hand was lost, but the profit from futures made up for it.

Gamblers are not included.

Moreover, the country also relaxed the issuance of licenses for corn bioenergy at this time. Although it was not stated explicitly, the meaning was clear.

At the same time, corn exports are strongly encouraged.

Driven by various policies, processing and trading companies began to purchase corn at the 0.50 yuan mark.

0.5 yuan per catty, this is almost the country’s minimum storage protection price!
However, the output is still too high!

Overall supply is still in excess.

The downward momentum is still there.

No one can tell when the decline will stop. If you start buying a few days earlier, you may suffer heavy losses.

...

September 27th.

Guo Yang inspected the countryside and grain and oil processing factories for several days in a row, ensuring a good harvest while purchasing corn and soybeans with all his might.

In the car, Guo Yang felt the weight of the Tianyu No. 8 corn cobs.

“The hundred-grain weight really stands out!”

This ear of corn comes from the farmer who set a record of super high yield of 4100 kilograms of corn per mu.

The planting model is indeed remarkable, but the farmers’ extremely high cost investment in water and fertilizer is the key factor in increasing production, and there is no need to copy it.

But it's enough to use it as a gimmick.

When passing through Jiayuguan and Jiuquan urban areas, construction of the new urban areas and ecological parks along the two lakes and one river began.

But Guo Yang was not in the mood to pay attention.

While calculating the profits from this corn transaction, he wondered if anything had happened in the soybean and corn fields in the United States.

Jiahe has been making a lot of money during this period, but it has also been under pressure from domestic public opinion.

One is deliberate market manipulation!
But in fact, Jiahe has invested relatively little money in the Dalian Commodity Exchange, with the bulk of its investments in the Chicago Mercantile Exchange. After all, the domestic plate is too small.

The domestic market is mostly dominated by state-owned enterprises.

He communicated with the Ministry of Agriculture and the Grain Bureau in advance. Several state-owned enterprises have made a lot of money recently, and their presence has been vaguely felt abroad.

Second, the pressure of unsalable products is huge.

Jiahe is trying its best to purchase corn in the range of 0.5 to 0.52 yuan per catty, but Jiahe's storage is not unlimited and the supply must be circulated.

Fortunately, the national grain reserve also opened its warehouses and worked hard to collect grain.

But the best way to alleviate the decline is to significantly reduce production in the main producing areas of North America.

There have been constant reports of production cuts in the market, but there has been no major news.

Guo Yang is looking forward to it!
As a result, the market continued to fall for two days.

The main contract of corn futures at CME Group has fallen by 34%.

Jiahe Grain and Oil is gradually closing its positions and starting to build a small amount of long positions in corn and soybeans.

The short positions in soybean futures were closed a few days ago, and the original funds and floating profits of 144 billion yuan before September are already on their way back to China.

The floating profit of 101 billion yuan after September and the 94 billion yuan remaining from the earlier sale of grain were invested in this corn transaction.

The total amount was approximately 195 billion yuan, with an average leverage of 10 times. After the positions were gradually closed, the cumulative profit reached 32.8%.

最终盈利为195*10*0.328=639.6亿元，算上本金，合计195+639.6=834.6亿元。

Together with the 144 billion yuan returned to China, the total is 978.6 billion yuan.

In fact, Guo Yang and his team members have become numb to these data in the past month.

You have to be numb, only by being numb can you complete every operation and instruction more clearly.

But as the huge floating profits gradually came into their pockets, everyone was excited by the long string of numbers!

In February 2007, the person who topped the Hurun Rich List in China was Yang Huiyan of Country Garden, with a net worth of 2 billion yuan.

But this 978.6 billion is cash!
In terms of assets, everyone thinks that the boss is the big shark hidden in the country!

Late at night, Guo Yang gradually calmed down.

Of the 978.6 billion yuan, 200 billion yuan will be kept to slowly build long positions, and the remaining 778.6 billion yuan will be transferred back to China in batches.

Provide impetus for the development of new projects!
However, there is no rush for domestic project development at this time, as the scientific expedition team has not returned yet.

For now, the focus is still overseas.

Today, the subprime mortgage crisis is getting worse and worse, and food futures have suffered again. Funds in the market have begun to flow into commodities such as oil and gold in large quantities.

Crude oil prices are also close to breaking through $100 per barrel.

Ocean shipping companies are on the brink of life and death.

Moreover, Monsanto's silence made him even more certain that something was definitely wrong in the Midwest of America.

(End of this chapter)