ALGO TREAD TRIGGERING DRAMATIC SHIFTS IN PRICES OF YOUR DAILY NEEDS COMMODITIES
algo treas

ALGO TREAD TRIGGERING DRAMATIC SHIFTS IN PRICES OF YOUR DAILY NEEDS COMMODITIES

Samarth Mercantile

*The trend enjoys a powerful tailwind thanks to the money flowing into systematic macro and an array of quantitative funds, which are seeking new opportunities to boost their returns

*The New York cocoa markets recent run up from the $2,500 a tonne it was trading at in March “had absolutely nothing to do with fundamentals


It is triggering dramatic shifts in prices of your daily needs commodities sparking concern that these commodities are being divorced from their fundamentals of supply and demand. So can we say that computers driving the cost of your food stuff like wheat, corn, rice, sugar, coffee, edible oil to chocolate bar? Specialised small commodity markets such as sugar, cocoa and coffee are becoming the next frontier for the waves of buying and selling generated by algorithmic trading, which has long since carved out a presence in currencies, equities and interest rates.

The trend enjoys a powerful tailwind thanks to the money flowing into systematic macro and an array of quantitative funds, which are seeking new opportunities to boost their returns. Many traders and brokers say computerised trading has driven sharp changes in prices for cocoa, coffee and sugar markets, which have taken market participants by surprise. People are looking for more position markets to deploy that money. Many of the computer-driven strategies are searching for risks and returns uncorrelated with other financial markets.

The number of commodity trading advisers (CTA) managers trading niche markets has more than doubled to about 10 over the past couple of years, and although still relatively small, those funds manage about $15 billion, according to Société Générale. The advance of computer-driven trading, where algorithms execute trades in anticipation of a market rising or falling, has also been spurred by the retreat of investment banks and discretionary hedge funds which in the past supported market making in commodities markets.

A number of important players in agricultural markets are also feeling the heat. Producers, such as Sugar, coffee, cocoa farmers and cattle ranchers, and end users of the commodities including food companies who also rely on the market to hedge their risks have experienced surprising price shifts. For example, in the cocoa market, the New York comex price has jumped more than 50 per cent since the start of the year to a 19-month high of almost $3,000 a ton in April. That punched the New York market to a record spread over the price of cocoa quoted in London, which was trading at about £1,800 a ton.

The New York cocoa markets recent run up from the $2,500 a tonne it was trading at in March “had absolutely nothing to do with fundamentals. That comes as the coffee and sugar markets too have experienced a sharp rise in bearish positions built by “managed money” a market category that includes speculative funds, to record levels. High-frequency traders, who transact small positions in a space of milliseconds, are another group who have pushed into the agricultural commodities markets. High-frequency [traders] has started to enter the commodities space in a significant way.

Some market veterans argue that despite the rise in volatility, the ultimate direction of the price is always determined by the fundamentals of supply and demand. The fact of the matter is that we need speculators. Over time the fundamentals come into play in the market. Nobody is bigger than the market. Date: 18-5-2018

Tri Une Impex Consultant

You can share this post!

RELATED NEWS

20 Comments

  • Kyrie 6 , May 11, 2020

    A lot of thanks for every one of your work on this web site. debby really likes making time for investigation and it's really easy to understand why. many of us notice all of the dynamic form you deliver priceless suggestions via this web site and as well as increase participation from some others on this point so our child is really discovering a lot of things. enjoy the remaining portion of the new year. your doing a really good job.

  • Hermes Belt , May 14, 2020

    I happen to be commenting to let you understand of the terrific encounter my wife's girl gained checking the blog. she realized plenty of details, with the inclusion of what it's like to possess a great helping mood to get other folks without hassle learn about chosen tortuous subject matter. you undoubtedly exceeded my expected results. thank you for supplying those warm and friendly, trustworthy, revealing and also easy tips on the topic to tanya.

  • Moncler Jackets , May 18, 2020

    Thanks a lot for giving everyone an exceptionally superb opportunity to check tips from this blog. it really is so pleasing and as well , stuffed with a good time for me and my office friends to visit your website at least three times a week to study the fresh guidance you have got. not to mention, i'm certainly contented for the impressive creative concepts you serve. certain 3 points in this article are completely the most efficient we've ever had.

  • Yeezy Boost 350 V2 , May 21, 2020

    I definitely wanted to send a small note in order to appreciate you for the pleasant tactics you are writing on this site. my extensive internet research has finally been rewarded with sensible details to write about with my friends and family. i 'd declare that most of us readers are rather blessed to be in a fabulous website with very many special people with very beneficial concepts. i feel really fortunate to have come across your web site and look forward to some more amazing times reading here. thanks once more for a lot of things.

  • Yeezy Boost 350 , May 23, 2020

    Thanks a lot for giving everyone an exceptionally wonderful possiblity to read articles and blog posts from here. it really is so sweet and also full of fun for me and my office acquaintances to search your site at a minimum 3 times in one week to find out the fresh issues you have. not to mention, we're always satisfied considering the mind-boggling techniques you give. certain 2 tips in this posting are in truth the finest i've ever had.

  • Chrome Hearts Store , May 26, 2020

    I definitely wanted to write down a comment to be able to thank you for all of the fantastic items you are showing at this site. my rather long internet research has now been paid with sensible points to talk about with my co-workers. i 'd express that most of us visitors are truly lucky to be in a great site with very many outstanding professionals with very beneficial points. i feel really happy to have encountered the web site and look forward to some more entertaining times reading here. thank you once more for all the details.

  • Coach Outlet , May 28, 2020

    I wish to point out my gratitude for your kind-heartedness supporting people that really want guidance on in this situation. your personal dedication to getting the message across has been pretty productive and have usually made girls like me to achieve their pursuits. your entire informative recommendations means this much to me and extremely more to my peers. thanks a ton; from everyone of us.

  • Paul George Shoes , May 30, 2020

    I wish to show my thanks to you for rescuing me from this situation. right after surfing around throughout the the web and finding methods which are not pleasant, i believed my life was over. existing minus the solutions to the difficulties you have solved by means of your main report is a critical case, as well as the ones which might have adversely affected my career if i had not come across your web site. your own personal knowledge and kindness in controlling the whole thing was invaluable. i'm not sure what i would have done if i hadn't discovered such a solution like this. i'm able to at this moment look forward to my future. thanks for your time very much for this expert and results-oriented help. i will not hesitate to propose the sites to any person who would need counselling about this situation.

  • Supreme New York , Jun 02, 2020

    I'm also commenting to let you know of the extraordinary encounter my girl found reading through your web page. she mastered such a lot of issues, with the inclusion of what it is like to have an awesome coaching mood to let many more very easily have an understanding of specified complicated things. you actually did more than our own expectations. thanks for presenting these great, safe, edifying and as well as fun thoughts on this topic to tanya.

  • Air Max 90 , Jun 04, 2020

    Needed to put you the bit of observation to be able to say thanks a lot as before about the lovely principles you've provided on this page. it has been so incredibly open-handed of you to convey easily exactly what a number of people might have sold for an ebook in order to make some dough for themselves, principally since you could have tried it in case you considered necessary. those techniques additionally worked as a great way to know that some people have a similar dreams the same as my personal own to realize good deal more concerning this problem. i am certain there are several more enjoyable opportunities ahead for people who browse through your blog.

  • Yeezy Boost 350 V2 , Jun 06, 2020

    I'm just writing to let you be aware of what a really good discovery my wife's girl found reading through your web site. she learned a wide variety of details, most notably what it is like to have a marvelous coaching spirit to get most people without difficulty learn a number of specialized things. you actually exceeded our expectations. thank you for providing such helpful, trusted, explanatory and in addition fun guidance on this topic to ethel.

  • Curry 6 Shoes , Jun 09, 2020

    Thanks a lot for providing individuals with such a special opportunity to read critical reviews from this web site. it's usually so brilliant and jam-packed with a lot of fun for me and my office acquaintances to visit your web site not less than three times in a week to see the newest stuff you have. and of course, i'm always fascinated for the remarkable tactics served by you. some two tips in this article are undeniably the most beneficial i've had.

  • Off White Nike , Jun 11, 2020

    Thanks a lot for providing individuals with remarkably special possiblity to read from this blog. it's always very lovely and as well , stuffed with a good time for me personally and my office fellow workers to visit the blog not less than 3 times per week to find out the latest secrets you have got. of course, we are at all times impressed for the attractive pointers you serve. selected two tips in this posting are in reality the finest we have had.

  • Offwhite , Jun 16, 2020

    I intended to draft you that tiny observation to finally give many thanks once again for these spectacular solutions you've shared on this page. it's particularly generous of people like you to allow publicly what exactly many of us might have marketed as an ebook to end up making some bucks for themselves, mostly now that you might have done it in case you decided. those strategies in addition worked to become a good way to comprehend other people have the identical dreams just as my own to find out many more in terms of this issue. certainly there are lots of more enjoyable periods ahead for individuals who looked at your website.

  • Air Max 97 , Jun 19, 2020

    I want to show my love for your generosity giving support to those people who actually need help on that niche. your special commitment to getting the message all-around came to be rather functional and have without exception made most people like me to achieve their endeavors. your own valuable help can mean a lot a person like me and especially to my fellow workers. thank you; from all of us.

  • Jordan Store , Jun 23, 2020

    I in addition to my buddies were actually digesting the great tips found on your web site and so at once came up with a horrible suspicion i never expressed respect to the website owner for those secrets. all of the ladies became as a consequence stimulated to read through all of them and already have certainly been enjoying them. thanks for getting indeed kind and then for obtaining varieties of incredibly good tips most people are really desirous to understand about. my personal sincere regret for not expressing gratitude to you earlier.

  • Longchamp Bags , Jun 27, 2020

    I would like to convey my love for your kindness in support of folks that should have assistance with this important subject. your very own commitment to passing the solution all through became exceptionally important and have really empowered associates much like me to reach their pursuits. your entire interesting help and advice can mean a whole lot a person like me and far more to my office colleagues. regards; from each one of us.

  • Jordan Shoes , Jun 30, 2020

    I wanted to write a simple comment in order to thank you for some of the awesome points you are posting at this site. my prolonged internet lookup has at the end of the day been honored with wonderful knowledge to exchange with my guests. i 'd tell you that we visitors actually are unequivocally lucky to dwell in a magnificent community with very many special professionals with great basics. i feel quite privileged to have seen your entire web pages and look forward to so many more cool moments reading here. thanks once again for all the details.

  • Supreme Clothing , Jul 02, 2020

    Thanks for all of the hard work on this web page. betty take interest in carrying out research and it is simple to grasp why. most people know all regarding the lively form you convey priceless tips and hints on your web blog and inspire participation from other ones about this issue while my child has been understanding so much. take pleasure in the rest of the year. you have been carrying out a powerful job.

  • Curry 5 , Jul 05, 2020

    I am writing to make you know what a perfect experience my wife's daughter developed browsing the blog. she came to understand so many issues, which include what it is like to possess an incredible giving style to have many more smoothly fully grasp a variety of specialized things. you really surpassed our own expectations. thanks for supplying such informative, trustworthy, educational and easy tips about that topic to jane.

Leave Comments