I was reading a Reuters article on the May 6th 2010 "Flash Crash" in the stock market. The article talks about how more and more US stocks are trading ultra fast by computers.

The article also talks about how this method is rapidly spreading to other exchanges,  options and currency trading around around the world. Must be profitable for someone.

It looks like it would end up in corn, beans, wheat before long.  The whole system makes a profit on rapid and large trades. The system seems to feed off itself by causing big swings in prices then quickly profiting off of them, regardless of underlying logic.  There is a mention of a trader in India setting up a computer trading bank of computers right next to the exchange servers - theoretically so his trades go first I guess.

We and most folks assume that trading in stocks and grains etc is a logical process with at least some relationship to reality, profits, weather, supply & demand, etc.  It looks like this is a thing of the past.  Folks trade quicker than the average person and just profit off of the swings.

I think this does not sound good for producers nor endusers of the actual farm products. Wild swings in prices are not good for anyone but these traders who have no stake other than to turn a very quick profit. The actual producer could get economically wiped out on the value of his grain in minutes.

Something to be aware of and to watch out for. I see the SEC is starting a rule to suspend trading in major company stocks if more than a 10% swing occurs in a few minutes. Sounds like something the CBOT and other grain and livestock exchanges should be looking at too. jmho.

Jim at Dawn

(I was reading on Verizon, the Florida link above is the same article as it comes up on Goggle)