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blanchschwarz

• LIVE CATTLE

• SHEEP

• HOGS

• POULTRY

• EGGS

• PORK BELLIES

IN THE UNITED STATES TRADED IN CHICAGO ON THE

CHICAGO MERCANTILE EXCHANGE

Derivatives where invented as an insurance policy, the futures contracts on commodities where the birth of financial derivatives. They were invented so farmers and ranchers could stay in the game. Look if everyone is planting at the same time then everyone is selling at the same time. Calf’s where born in the spring all at the same time (that’s before the feed lot cattle industry was turned in to the corporate monster) .

Futures where a big part of American romantic culture remember Caleb in east of Eden that was set in 1916 futures have been traded all over America. Then in the early 80s the options on equities came to life. I was like a kid on Christmas everyday. They options market has grow over the past 3 decades to be a very large trading vehicle second to equities and bonds. You can call the c.b.o.e. and request a certain strike our expiration. I have been doing it for decades.

Trading cattle futures in the early 70s. I grew up on a ranch in one of Americas Great cattle market towns Ogden Utah, the Junction City. Ogden was the hub for ranchers in Wyoming Idaho, Montana, Utah and Nevada to get their cattle to market. All the rail lines met here in Ogden. The golden spike was driven near Ogden. So the cattle industry grew with the railroad. We had a huge Animal processing Industry at the rail yards. Right at the rail yard was the EXCHANGE BUILDING, they traded cattle futures in cash. There was a table about 20’ by 20 ‘. Ranchers and traders (which where typically the same people.) Traded in cash in many cases suit cases of cash. Their where armed guards with rifles in that room. I saw men made and broken weekly as a boy. I started to understand how they worked at a very earlier age. I asked my father at around 10 years old why they don’t just buy the cows, why do they buy contracts. He said " when we raise cows they are all born at the same time ( spring) they all are full grown at the same time. Ya it’s like when you plant wheat in the spring and harvest it in the fall. Everyone plants at the same time and everyone sells at the same time. So supply and demand will do what kid." I knew then the price would be low I said. He said "that’s it. So a very long time ago, someone in Chicago or New York came up with the Idea of future contracts so farmers and ranchers could lock in their profits, and use that contract as a bank note. They would show the contract to the banker so they could borrow money to survive until they got their crops harvested. "

Of course it evolved in to a trading vehicle THAT’S WHAT MARKETS DO, THAT IS THE FUEL THAT MAKES THEM WORK. kevin d. blanch 5/28/10