The Decisive Battle Begins: Wheat Bulls' Counterattack

Chapter 389 The Decisive Battle Begins: Wheat Bulls' Counterattack

On Monday, before the morning light had fully dispelled the thick fog in the Lake District, Larry Livingston was already standing in his top-floor office at the Chicago Mercantile Exchange, a report spread out before him, the still-wet numbers gleaming coldly under the gaslight.

"6900 million bushels." Larry's fingertips traced the latest compiled registration data, a smile on his face.

This is open interest data from the Chicago Mercantile Exchange. Nearly 70 million bushels of wheat remain unopened for the September wheat contract.

Open interest refers to the number of contracts currently held by both long and short positions. In futures markets, the trading volume is often much larger than the actual wheat waiting for delivery in futures warehouses. Near the end of the term, the vast majority of contracts disappear due to offsetting and closing out positions, with only about 5% to 8% of contracts entering the physical delivery process.

Based on past experience, the actual delivery volume this year should be between 360 million and 620 million bushels.

The size of open contracts in the futures market is often several times to dozens of times the physical quantity, which is a breeding ground for short squeezes.

Because most traders don't actually intend to enter the delivery phase, especially short sellers. When the delivery phase arrives, they have to hand over wheat that they didn't actually hold to the traders who opened long positions. If they can't provide physical wheat, they will be punished by the exchange, or even charged.

The vast majority of traders would rather have their accounts wiped out than be punished by the exchange, because that would mean lengthy lawsuits and irreparable damage to their business reputation.

Open interest data was an open secret at the exchange at that time. But things were different for Larry now; by choosing to share profits with his counterparts, he was naturally offered some previously unavailable benefits.

A moment later, there was a knock on the door. Matthew brought in a stack of telegrams, all intelligence sent by his comrades from several important acquisition points along the railroad line.

Cargill's Livingston Agricultural Revitalization Program is progressing very well, with inventory figures from various locations showing a slow but steady increase.

Seeing Larry's quiet expression as he read the telegram, Matthew waited a moment before speaking, "Are you sure, my brother?"

"80%," Larry looked up from the telegram, smiling at Matthew. "Wait, the exchange will provide another figure. As long as this figure isn't problematic, it won't just be 80%."

"What number?"

"Deliverable wheat stocks." Larry placed the telegram on the table, a smile on his face, and explained, "This is the data on wheat that can be delivered right now. If this number isn't large, then our control over the future of the market is almost finalized."

"So, how much deliverable wheat do you think there is currently?"

"Approximately 500 million bushels!"

As the two were talking, there was another knock on the door. A stock exchange manager in a suit brought in another report.

Larry exchanged a few pleasantries with the man, and after he left, Larry eagerly focused his attention on the numbers in the report.

The wheat stockpile is over 1128 million bushels.

Matthew leaned closer to take a look, his brow furrowing slightly. This number was twice as large as Larry's estimate. Matthew asked with concern, "This number—is larger than we expected!"

Larry laughed and replied, "No! This number is just right. Don't forget, this number needs to be discounted."

As he spoke, Larry flicked his finger at the 1128 million bushels on the report.

Matthew was about to ask a question when he realized what was going on, and his brows immediately relaxed.

"You're right! Larry, I almost forgot. You actually planned this a long time ago—" Matthew smiled at Larry, "You're really something!"

"So the actual deliverable is now 628 million bushels, not 1128 million bushels." Larry laughed.

Beneath the arched dome of the Chicago Mercantile Exchange, the air at 8:55 a.m. Monday was frozen, like lead.

Larry stood in the shadows on the second floor, his fingertips unconsciously rubbing against the metal bolts on the marble railing.

Beneath his feet lay the trading floor of the Chicago Mercantile Exchange, where hundreds of floor traders in various uniforms stood holding their breath like soldiers about to charge into battle.

People aren't deliberately keeping quiet, but as the last week of September approaches, coupled with the dismal market conditions, these floor traders naturally focus their attention on the upcoming trades.

Their eyes all turned to the huge brass clock on the wall—the trading bell that would ring in five minutes, determining the fate of countless people.

Matthew quietly walked up behind Larry and said in a low voice, "There is a total of $230 million in margin in the institutional funds account. As you arranged, this margin is now distributed across 20 agent accounts, and there are also 20 floor traders ready to follow your instructions."

As he spoke, Matthew handed him a slip of paper covered in numbers. Larry took it and immediately spotted the most crucial line.

"At a base price of 58 cents, with five times leverage, $200 million can leverage 3448 long positions."

Larry nodded slightly. For the first round of attacks, he planned to use less than one-fifth of his firepower.

At 9 o'clock sharp, the bell rang loudly!

The trading session erupted like a boiling volcano. The quoter roared out the first number, "September wheat—58 and a quarter cents!"

Almost simultaneously, more than a dozen agents immediately raised their arms and shouted.

"58 and 3/8 lots, buy 50 lots!"

"58 and 1/2 lots, buy 80 lots!"

Tentative buy orders from the bulls rained down on the market. The price surged to 58.5 cents within 30 seconds.

Other unsuspecting traders on the floor looked on with confusion as a group of unfamiliar faces shouted and bought.

Because they weren't short covering their positions, but rather opening new long positions!

"Damn it, am I seeing a ghost today? How come someone's in this position? And they even dare to place a long order?"

One person muttered to himself.

"I've heard about it—Cargill is buying up grain, did you know? They're offering 70 cents a day!"

Another person answered.

"Really? Such a thing exists!"

"I've heard about it too, but my version is different from yours. It's just a charity project; the guy named Livingston wants to help farmers—"

"Have you heard, old Stone?" These familiar traders subtly gathered around old Stone.

Old Stone's reputation in the trading world was already infamous after his last maneuver. But people admire strength, and when faced with a situation they can't handle...

Of course, I still need to ask him about this matter.

Old Stone's face was cold and stern as he said, "I'm sorry, gentlemen, I know nothing!"

"So, are you planning to make a deal?" someone else asked.

At this moment, Green, the trader who had slapped old Stone before, appeared. He said in a sinister tone, "Mr. Stone will definitely make his move. He'll probably use the same old trick again. First, he'll buy in large quantities, then continue shorting—everyone knows there's an abundance of wheat on the market!"

Stone glared at him but didn't answer.

At the same time, the short sellers launched their counterattack. More than 200 short contracts were poured into the market like a bucket of ice water, and the price immediately fell back to 58 and one-eighth of a cent.

Without hesitation, the traders crowding around the counter immediately placed the other party's short order.

Old Stone saw it all, his eyes deep and thoughtful.

At 9:15, the game within the trading venue escalated.

When the price tested 58.5 cents for the third time, something unexpected happened. A broker wearing gold-rimmed glasses suddenly held up a trading order and roared, "The Livingston stockpiling program has stopped! The spot price is going to correct itself; I'm shorting 300 lots!"

The traders were briefly surprised; 300 lots was no small number. A single sell-off would significantly impact market sentiment.

The impact is significant; the floor price of 58 cents may not be maintained.

The trading pool immediately stirred, with some of the long positions that had followed the trend at the opening beginning to cut their losses and close out their positions.

The traders crowding around the trading counter all turned around and looked at an old man on the sidelines. He was holding his forehead with his left hand, seemingly oblivious to the fluctuations in the market!

"I'll take it! 58 cents exactly, 100 lots!" A trader turned to look at the guy with the gold-rimmed glasses, his face full of determination.

"I want 50 hands!" Another person chimed in.

In just five minutes, the 300 short positions that had been suppressing the price were all absorbed by this group of traders, disappearing completely like ice blocks under the midday sun.

Wheat prices remained above 58 cents throughout September.

到了9：45，小麦价格已经攀升至59又3/4美分。这十几个脸生的交易员不停的吃进小麦，让众场内交易员都惊呆了。

"They opened at least 800 new positions —"

"Yes! My God, what's going on? Is there really some new information?"

"You need to understand—if the spot price is really at 70 cents, then there's at least a 10-cent difference if you trade now!"

"Don't you think we should also enter the market and place some long orders?"

The traders gathered together and whispered among themselves.

A trader approached old Stone, looking at him with reverence, hoping to gain some insight from him.

"What do you think, Mr. Stone?"

Old Stone had long since realized something, but he remained expressionless.

"No comment, my friend. I have no requests from clients right now; I'm just here to watch the show."

Just then, a trader wearing a top hat, also an unfamiliar face, squeezed into the counter. "Market buy 300 lots! Market price!"

The trading pool instantly exploded.

A short position of 300 lots just now failed to break the 58-cent mark. Now, the long position has reversed course and dumped a long position of 300 lots into the market. How will the price change then?

Long-awaited bullish followers flooded in like a tidal wave. Before that person's 300-lot long order was fully executed, the price had already broken through the key resistance level of 60 cents.

The short seller who just sold 300 lots has reached his stop-loss level, and his gold-rimmed glasses have started to tremble. He raised his hand to try and steady them, but the glasses trembled even more violently.

Having 300 short positions means that for every cent the price rises, you will lose $15,000!

Prices are still rising!

60 cents exactly!

60 and 1/4 cents!

60 and 1/2 cents!

When the price plummeted to 60 and 3/4 cents, the man with the gold-rimmed glasses couldn't take it anymore! He yelled that he was going to close out his short position.

Closing a short position is equivalent to buying. The buy after the stop-loss order is triggered accelerates the price breakout. This buying triggers more buying, and the stampede caused by the first batch of short covering begins.

Meanwhile, another message began circulating among floor traders: "Wheat collection in Livingston has not stopped at all. That was just a rumor. Not only has it not stopped, but there are also reports from various places that warehouses are unable to deliver due to transportation difficulties."

These are the brokers for Larry's other two smaller clients. They didn't trade on the floor—instead, they diligently started "debunking" the rumors among the floor traders!

Immediately, public sentiment was agitated. People suddenly felt that the final spot price of wheat should be above 70 cents.

Right now, it's still 9 cents away from the actual spot price!

Go long! A 9-cent price difference is enough for many floor traders to make a small profit.

More and more traders who had entrusted their positions to them began to enter the market, and after the price broke through 70 cents, the bulls who had previously suffered heavy losses began to hope that wheat might really return to 70 cents.

Now it's the turn of the short sellers who didn't close their positions in time to panic. Short-selling orders are flooding the market like snowflakes.

But the price changed too quickly; the latest price has already reached over 71 cents in the blink of an eye.

Many limit-price closing orders could not be executed at all, and these orders were stuck below 71 cents, forming a huge buy order backlog.

At this point, the price no longer needs to be actively maintained by the bulls. Since the bears started to close their positions, the price has naturally formed a strong short-term upward trend.

Old Stone smiled.

Meanwhile, in Keane's office in New York.

James Keane received the latest intelligence from Chicago. He glanced at it, then suddenly stood up and shouted loudly towards the office next door.

"You bastards who deserve to go to hell! Why are you only giving me this crucial information now? The game's already open for trading!"

The assistant from the next office rushed in, his face filled with panic. He had no idea which piece of information was faulty. "Mr. Keane, which...which one are you referring to?"

"This! News from Chicago!" Keane slapped the telegram, his hands trembling.

The assistant leaned closer to take a look and saw a line written on it: "The Livingston Agricultural Revitalization Project is purchasing high-quality wheat at a premium." The assistant paused, then hurriedly explained, "This intelligence was just sent last night; we left it on your desk—"

"Shut up, this isn't the time for explanations!" Keane waved his hand hastily, interrupting his assistant. "Didn't I just tell you to add 200 lots of short positions in wheat? Cancel that trade immediately!"

The assistant dashed back to the trading room next door, and returned 30 seconds later, his face filled with even deeper panic. "Sir! The telegram has already been sent and cannot be withdrawn!"

Keane's face turned ashen.

The biggest problem for futures trading in New York is time. It takes at least 15 minutes for a trading order to be sent and executed.

If there is a busy trading session, such orders can be delayed for more than 20 minutes.

For some reason, Keane immediately sensed danger the moment he saw Livingston's name on the telegram.

Years of trading experience have instilled in Keane a sensitive, suspicious, and cautious personality. His success today is also largely due to his unwillingness to take risks.

Keane thought for a few seconds, then said loudly and decisively to his assistant, "This is a fucking trap, close the position immediately!"

"But, Mr. Keane, you currently have 1250 short positions in total. Do you want to close them all at once—"

Before the assistant could ask further questions, Keane yelled at him, "Damn it, get on with it!!"

The assistant rushed to the trading room to execute the transaction, while a chaotic commotion erupted from next door.

Keane stood before the price quote machine, his face ashen, but his machine was connected to the New York Stock Exchange. He had no way of knowing the wheat prices on the Chicago Board of Trade, but he had a bad feeling—