Chapter 371 Louis Dreyfus Admits Defeat

Fatigue spread from my heart.

After two weeks of staying up late, Liam felt overwhelmed, as if even his thinking had become slow.

“How much money will I lose if I close my position?”

Hearing this, the trader couldn't help but tremble, and cold sweat broke out on his forehead in the middle of winter.

In two minutes, or maybe five minutes, the trader gave the answer.

"The current holding volume is about 21 lots. If we close the positions now, the average loss per lot will be about 3800 yuan, and the total loss will be about 8 million yuan."

Liam felt as if all the strength had been drained from his body. He suddenly became listless and almost fell to the ground.

Rick quickly supported him and asked, "How much goods does Ikam have that can be delivered in kind?"

“Haha.” Liam laughed miserably, “Only 5 tons.”

"You are crazy!"

Rick finally understood why Liam lost his composure like that. 5 tons could only hedge a loss of 5000 million yuan at most.

This means that once the position is closed, Ikam’s actual loss will reach 7.5 million yuan.

This is even higher than Louis Dreyfus’ losses!
“That’s why I’m risking my life!” Liam’s eyes were wild, like a mad gambler. “You’ll help me, right? Rick, we still have at least three trading days left, and we can even enter the delivery month.”

Entering the delivery month means that the margin will be significantly increased and the financial pressure will increase.

Rick shook his head. "Louis Dreyfus won't take that risk, and you probably won't have that chance, Liam."

“What do you mean?” Liam was stunned, his scarlet eyes fixed on the board.

Rick glanced at Liam. Louis Dreyfus could bear the current losses. This was also the first time that the China branch operated 60 tons of futures.

Moreover, the operation did not violate any rules, it just skirted the line, so his troubles could still be dealt with.

But Liam was different.

With only 5 tons of cotton on hand, he dared to open more than 20 short orders in the futures market, which is equivalent to 100 million tons of cotton.

There are definitely violations.

This poor risk management will bury Liam!

This man is hopeless.

Rick looked at her with pity, and said, "Wall Street has already noticed the situation in China."

Liam was incredulous, "You said that?"

Rick shook his head. "Do you think I need to tell you? Last week, Zhengzhou Cotton's position exploded to nearly 70 lots, and in the past two days it has exceeded 100 million lots. Now the financial markets around the world are paying attention to Huaxia's movements."

"Ikam won't let you go on." Rick said self-deprecatingly: "You should get a call soon."

"What are you going to do?"

After thinking for a while, Rick was about to answer when there was a knock on the door and then the door was pushed open.

Several elites in suits and ties filed in, led by a slightly overweight white man with sharp eyes.

"Liam, I've taken over your job."

Liam was ready to answer the call, but he didn't expect the person to show up directly in the trading room. He slumped down on the sofa in dejection.

"What are you going to do, Blake?"

Blake ignored Liam, whose eyes were dazed and who had lost his mind, and turned his head to look at Rick.

"It's too late to save the situation." Rick shook his head for the nth time today. "Foreign banks have many restrictions in China."

"Besides, the exchanges and regulators have already increased the margin requirements, so there is no point in continuing to fight."

Blake asked the same question, “What is Louis Dreyfus going to do?”

There was silence for a while. The trading hall was completely silent, with only the trading board still moving.

"We admit defeat." Rick said, "Let's negotiate with Jiahe and ask them to let us go."

Blake thought for a moment and said, "There are still more than ten days until the delivery date. Is it too late to go to the market and buy cotton for delivery?"

"I've tried." Rick said helplessly, "The cotton price was too low in the early stage, Huaxia launched a purchase and storage policy, and then Jiahe launched a large-scale purchase. There is no cotton on the market that meets the delivery standards."

Blake was surprised. "Is Jiahe not afraid of your physical delivery?"

"Jiahe can really handle it, but it's not easy to deal with it afterwards." Rick forced a smile, "This is our only confidence in the negotiation."

There was silence again for a while.

"Let's go together and beg it to let us go."

Liam raised his head, wanting to say something, but then lowered it weakly.

……

Zhejiang Province, Yongan Futures Trading Room.

"Fuck, why can't I get down?"

"Where are the main forces? Come out and work!"

Just then, Assistant General Manager Ge Guodong rushed in hurriedly.

“There are reports that Louis Dreyfus and Ikam have admitted defeat and are already looking for Jiahe Agreement delivery, and may close their positions soon.”

The conversation in the trading room suddenly stopped.

The news was too shocking, like a bolt from the blue, but everyone knew that Ge Guodong would never joke about this at this time.

After a while, General Manager Zhu Dachang asked, "Confirmed?"

"Nine out of ten," Ge Guodong said, "News from the exchange."

At this moment, someone pushed the door open again, and everyone in the room looked over.

"Chairman!"

"Chairman, why are you here?"

"If I don't come, are you going to make a scene?"

Chairman Huang glanced at everyone present, and everyone who came into contact with him felt somewhat guilty.

“Close the position.”

Some investors were dissatisfied and shouted: "We lost so much, how can we just break even?"

"You can wait too!"

Mr. Huang ignored him and walked towards the trading terminal in the trading hall. The trader was still staring at the market.

"What catches your eyes?"

"They have loosened their liquidity and are not forcing us to sell our stocks. What are you waiting for if you don't run away now?"

"If you really want to make an effort, you would have been liquidated long ago. Do you have spot goods in your hands?"

The speculative boss retorted: "Who would actually buy spot goods if they were shorting? Then what is the point of futures?"

"That's all I have to say." Director Huang shook his head and said, "This week is the last chance. By next month, they will be able to take in as many spot stocks as possible. Why would they be afraid of pure speculation like you?"

“The regulators don’t care?” The investors were still unwilling to give in and said angrily, “This is illegal market manipulation!”

"You know who violated the rules." Chairman Huang said disdainfully, "Do you think others can't consume millions of tons of cotton?"

"Impossible, absolutely impossible." The bosses collectively collapsed, "That's billions or even tens of billions of dollars!"

"The exchange sent a letter to Jiahe, and Jiahe responded that it could issue warehouse receipts for 100 million tons or even 200 million tons at any time!"

"But can you deliver so much goods?"

When Chairman Huang said this, he was once again shocked by this spirit.

There are not so many goods in the futures trading warehouse of the entire Zhengzhou Commodity Exchange now.

All major factories also rushed to grab goods in the market, and the cotton spot market became very tight for a while!

"Jiahe is keeping the price at around 15000 just to maintain the stability of the cotton market. Do you think they really want to let you go?"

"To tell you the truth, Louis Dreyfus and Jiahe negotiated, and Jiahe really had its eyes on Louis Dreyfus' 60 tons of cotton."

"Just take care of yourself."

Chairman Huang turned his back and said to Ge Guodong and others: "Pay attention to risks at all times. If you fail to add margin in time or submit warehouse receipts, you will be forced to close according to the rules."

Following his order, the Zhejiang business representatives seated at Yongan Futures became completely restless.

"How much room do we have to add to our positions?"

"The risk level has exceeded 93%." The trader replied: "It has entered the warning line. The current loss of closing the position is about 1.4 million."

Ge Guodong said coldly: "You don't have much time left."

...

For three consecutive days, Tuesday, Wednesday and Thursday, both the bulls and bears suddenly became quiet.

There are only over one million cotton positions left hanging there, and the cotton futures market suddenly becomes volatile.

It was not until after the close of trading on Thursday evening that multiple financial news media outlets reported on the incident, finally revealing the tip of the iceberg to the public.

Sohu Finance's review today: Fighting against foreign capital! The cotton futures forced liquidation incident, foreign capital suffered a huge loss of 1 billion! ——
This was the first time we successfully squeezed out foreign capital and won a great victory in the local futures market.
-
In recent years, with the full opening of my country's cotton market, major international cotton traders such as Louis Dreyfus, Will Brothers, Icamm, and Cargill have all rushed into the domestic cotton market.
-
Public information shows that Louis Dreyfus' cotton company in the United States was previously the largest cotton supplier in the country. In 2003, its domestic sales exceeded US$16 billion.
-
Affected by the financial crisis, cotton demand was sluggish both at home and abroad. Louis Dreyfus took this opportunity to join forces with various institutions to significantly suppress domestic cotton prices and purchased a large amount of cotton at a low price.
-
However, their move was strongly countered by the domestic upstart Golden Harvest Group.
-
Bulls and bears invested billions of dollars in total and launched a fierce cotton futures game.
-
In the end, Jiahe Group defeated the multiple short sellers with its strong force. As the party that failed in this forced liquidation, foreign capital such as Louis Dreyfus began to communicate with the longs and ask for forgiveness.
-
According to sources, after many rounds of negotiations, cotton bulls and bears finally reached a consensus. On the same day, the bull representatives reached an agreement with the Louis Dreyfus Company China representative and decided to close their positions.
-
Both parties unanimously agreed that the short sellers, such as Louis Dreyfus and Yongan Futures, will give certain compensation to the long sellers. The specific amount has not been announced. According to the transaction and position situation of cotton futures, the compensation amount should be no less than 10 billion yuan!
-
The reporter called relevant personnel from Louis Vuitton China regarding this matter, but the other party refused to respond.
-
Louis Dreyfus, as a giant that calls the shots in the international market, unexpectedly suffered a major setback in the China Futures Market!
-
Maybe I won’t dare to do it again!

Another report that has also received widespread attention from domestic cotton companies is from China Business News: Will the domestic cotton market's tragedy end in 2009?
-
Since the implementation of the sliding scale tax, the inverted trend of domestic and international cotton prices has expanded, and the high price difference in the cotton market has caused downstream companies to complain.
-
The textile industry has been plagued by high cotton prices and sharp rises and falls. Against this backdrop, more and more domestic textile companies are planning to relocate their factories to Southeast Asia.
-
Although the policy is most intended to protect farmers, the farmers' income is actually not that much. In addition, the cost of cotton planting has increased significantly, and farmers' willingness to grow cotton has decreased.
-
However, this situation has been gradually reversed in the past two years. Tianhe Seed Industry has greatly increased cotton yield by improving varieties. At the same time, it has vigorously promoted the industrialization, standardization and mechanization of cotton planting, which has greatly reduced the unit cost of cotton. The competitiveness of cotton in the Northwest is no longer inferior to that of foreign countries.
-
Recently, Jiahe Group successfully attacked the short sellers who were suppressing cotton prices in the domestic cotton futures market!
Enable cotton futures to better play their pricing and hedging functions, better serve the cotton industry chain and the real economy.

In addition, Futures Daily also published the headline "Domestic cotton futures are expected to become a global market weathervane".
-
The U.S. cotton futures price is considered to be a barometer of global cotton prices, but recently, its cotton export contract volume has continued to decline and its pricing power has weakened.
-
With the gradual improvement of domestic cotton policies and the reduction of output and costs, as a major cotton producer and consumer, domestic cotton futures prices are expected to become a new indicator!

...

Jiuquan.

"Boss, are we being too kind?"

On the phone, Yang Cheng was a little confused as to why Jiahe let the short sellers go.

This time it could have directly hit the shorts, but in the end it was a bit anticlimactic and not satisfying enough.

Even though he made a profit of more than 1 billion yuan this time, after experiencing the ups and downs of the foreign market, Yang Cheng was no longer moved by this little profit.

Unfortunately, the opportunities like those in the past two years are no longer available.

Guo Yang laughed and said, "If you push people into a corner, aren't you afraid that they will ask you to take a homemade plane?"

"What is a homemade plane?" Yang Cheng asked puzzledly.

"It was like fireworks, with a loud bang, and then the whole hall turned to ashes. Think about your wife and children. Do you dare to force them to death now?"

Guo Yang's simulation was very lifelike, but Yang Cheng on the other side was frightened.

When operating on the foreign market, Jiahe can still withdraw unscathed because of the long time line and large scale.

In China, foreign capital such as Louis Dreyfus is still very disciplined, but there is also domestic capital. The painful lessons of history have told us that these people are really capable of doing such things. Thinking about his children at home, Yang Cheng immediately became timid.

"Boss, can we ask Qianlong Company to be responsible for Weiguang's security?"

"Of course, you can find Luo Xiu or contact Qianlong's boss Chen Chao directly."

Guo Yang thought for a moment and said, "We must also hurry up and invest in domestic science and technology and the Internet."

"it is good."

In the recent investment list, there are many companies that are well-known to later generations, and the long-term returns are definitely not bad.

Coming back to his senses, Guo Yang reviewed the entire process of this cotton futures transaction in his mind.

In fact, the biggest gain is not the 1.2 billion or 1.3 billion in revenue.

It is a declaration of sovereignty.

This is the biggest intangible asset. In the future, anyone who wants to develop cotton in China will have to ask Jiahe for its consent.

Of course, from the country's perspective, foreign investment will not cause any trouble in the long run.

The reason why foreign capital has been able to cause so much trouble in recent years is simply because regulators are not familiar with cotton futures.

In Guo Yang's memory, after Louis Dreyfus became familiar with its operating methods in China, it was also jointly attacked by various funds from Jiangsu and Zhejiang.

In the end, he also left with a huge loss.

However, there is one thing worth praising, that is, when foreign capital suffers losses in China, it always admits it in an orderly manner.

What surprised him was that Yongan Futures, the representative of Zhejiang Merchants Fund, also chose to admit defeat by agreement.

Guo Yang has some understanding of Yongan, the famous 930 Yongan soybean meal forced liquidation incident!
The incident happened in 2012 in the previous life, but Guo Yang only learned about the Yong'an incident after he came into contact with futures in 2014.

It is also a long squeeze, but the long side is Yongan Futures.

And the method is extremely cruel.

That is not forcing a bank to close its accounts, that is directly forcing people's lives. The savings of countless small investors have been wiped out. It is completely like a slaughterhouse.

In fact, the bears had already died and gone into the grave, but the main bulls didn't even want to let go of the grave.

After the market closed, two long-suffering retail investors met at a branch in Yong'an and detonated a homemade plane... Several people finally arrived in Yong'an.

Afterwards, the head of the National Grain and Oils Corporation, who had proposed the full industrial chain strategy with great enthusiasm at that time, was dismissed from his post.

The rest were also running and catching.

The reason why Guo Yang let the short sellers go was also to give them a way out.

Besides, Louis Dreyfus is really useful!

Domestic cotton futures trading has just started and the activity level is too low.

Many cotton companies do not even know how to hedge, and only use futures as a tool to make profits, but end up losing money.

Foreign capital such as Louis Dreyfus can not only activate the market, but also enable domestic cotton futures trading to progress rapidly.

If domestic cotton futures want to compete for the position of a weather vane for U.S. cotton, they cannot do without foreign capital.

In addition, Jiahe is not mature in cotton trade. Even if it really delivers the 60 tons of cotton, it can only be stored for a long time and digested slowly.

It would be better to reach an agreement on compensation and let Louis Dreyfus handle it itself.

After reviewing the whole thing, Guo Yang felt that there was nothing wrong with Jiahe's choice.

Profits have been maximized.

A stable market is not only beneficial to cotton farmers and cotton companies, but also extremely beneficial to Tianhe’s cotton seed sales.

...

At a small meeting of Tianhe Seed Industry.

Guo Yang listened to Qu Yang's report.

"Now the whole Xinjiang region knows about Tianmian 20, and farmers are enthusiastic about buying it. The sales volume of cotton seeds has increased significantly in the past half month."

"The price of 50 yuan per kilogram is much higher than the average price of 36 yuan per kilogram for conventional cotton seeds on the market, but the seeds are still in short supply."

One acre of cotton requires about 1.5 kilograms of seeds, and the current price is about 75 yuan per acre.

The price is not cheap, but it is not too outrageous and the value for money is significantly improved, and the cotton farmers’ cotton planting benefits have been significantly improved.

Guo Yang asked again: "What about the subsidies for improved varieties?"

"The subsidy is 15 yuan per mu, and this time it is directly paid to farmers, which is good news for Tianhe."

Qu Yang smiled and said: "I hope this year's new varieties can open up the cotton seed market in the Huanghuai and Yangtze River basins."

“That’s not easy.”

Guo Yang is familiar with the new variety, which was only cultivated this month. "It is a hybrid, and the cost of seed production is very high."

"It's expensive, but I have great confidence in Tianhe Academy of Sciences." Qu Yang said with a smile:
"Tianhe also has a 200,000-acre seed production base, and the cost of seed production will be lower."

"Just have confidence."

Generally speaking, the seed production cost of hybrid cotton is 8 to 10 times higher than that of conventional cotton, and the selling price is also more expensive.

For example, the prices of Hubei mixed cotton and Chinese mixed cotton are basically above 200 yuan/kg.

The advantages of hybrid cotton are also obvious, with high yield, good quality and strong disease resistance.

But it is difficult to promote it because it is too expensive. Currently, there are only a small number of trial plantings in the whole Xinjiang, and the sowing area does not exceed 2000 acres.

The cost of seeds per acre is nearly 300 yuan. Cotton farmers will not be interested unless there is absolute benefit.

Although Guo Yang is very confident in the newly cultivated hybrid cotton varieties, it will take at least three to five years to truly promote them.

Cotton, corn, soybeans, rapeseed, vegetables...Tianhe products are still the mainstream in the market.

After finishing the business, Guo Yang said to Qu Yang: "Keep an eye on the headquarters for a few more days."

"The boss is going on a business trip?"

Guo Yang pretended to be embarrassed and said, "Hey, isn't there an ice fishing competition at Xiangyang Lake? They want me to go there to be the center of attention."

"Uh...Boss, your acting is a bit fake."

"Is it that obvious?"

It has been a busy time, but Guo Yang really wants to take a break. It seems he will have to find a CEO in two years.

"You're just short of putting a smile on your face." Qu Yang joked, "Two days is fine, but after two days I'll have to go to the market to check out the situation."

"Two days is enough."

……

Xinjiang Province, Tianhe Seed Industry Wusu Agricultural Service Department.

Several pickup trucks and trucks were parked on the cement square outside the house, and under the warehouse shed, several strong men were carrying bags of cotton seeds.

The small room in the service department was also crowded with people, all queuing up to order cotton seeds.

Wenhong, the girl sitting at the front desk, looked up and said, "Don't crowd. Line up and come one by one."

Someone replied: "Are there enough seeds?"

"Who told you not to come earlier? Some people ordered seeds in August or September last year." Wen Hong said, "You are not in a hurry at all."

"I didn't know about it before, but I only heard about Tianhe's name during this cotton futures battle."

"Hey, I only knew about Tianmian after I started paying attention to cotton futures."

"It's mainly because I feel so relieved. Jiahe has forced the cotton price up. Otherwise, I might not have sold my cotton yet."

"No."

"Increasing production and income is the hard truth."

Listening to a group of people chatting, Wen Hong was no longer surprised. There were many people like this recently.

She's almost numb from collecting money.

Every day is monotonous and boring, and the seed money of tens of thousands or even hundreds of thousands of yuan can no longer stimulate her excitement threshold.

...

Late February, Henan Province, Jiaozuo.

On a river beach, green wheat stretches as far as the eye can see, and the crisscrossing farmlands are filled with busy figures.

Everything comes to life in spring, and it is the right time for irrigation.

Spring irrigation is the first water the land drinks after winter and is crucial to stable and high yields of wheat.

“This water comes just in time!”

Jin Kaiqiang from the Rich Farmers Cooperative heaved a sigh of relief, turned around and said to the young man next to him: "Thank you, Xiao Yu, for troubling you during this period of time."

"Cooperation is a win-win situation." Xiao Yu said, "Mr. Jin, do you plan to plant soybeans or corn next season?"

The rich farmer manages nearly 7000 acres of land, making him an absolute large-scale grower.

It is also a key customer of Tianhe.

In fact, spring irrigation should have started in early February, but it has not rained in the north for several months.

The fire on the Lantern Festival made Jiahe pay attention to the drought in the north.

Tianhe’s plan includes helping farmers solve the problem of spring irrigation, which includes running around, analyzing the water usage situation, and inspecting leaks.

Xiao Yu, the salesperson in charge of the Rich Farmers Cooperative, even helped to bring in a small excavator to dredge the canal...

Jin Kaiqiang thought for a moment and said, "Xiao Yu, what do you recommend?"

"Soybeans." Xiao Yu thought for a moment and said, "Your land is a bit hardened. Change the soil."

"Okay, you have the final say, let's plant soybeans."

If it were in previous years, Jin Kaiqiang would definitely not grow soybeans because the yield was too low. However, after cooperating with Tianhe for a long time, he also knew the name of the Tiandou series.

In addition, corn prices were sluggish last year... After much thought, soybeans are indeed suitable, and the seeds are also cheaper.

Xiaoyu is a conscientious person and did not make blind recommendations.

"Let's start with 25 tons of soybean seeds." Jin Kaiqiang said, "Pay for cash on delivery. I don't sell on credit."

"Okay, Mr. Jin."

Xiaoyu laughed. This order was worth 29 yuan, so it was easy!

It’s like this when working at Tianhe. In fact, there’s not much pressure on performance, and the bosses are very considerate. If you want to make money, then you should go to the market more often.

There will always be gains if you visit the market more often.

(End of this chapter)