Intro to Trading the Grain Market
Dan Gramza explains the basics of trading the grain markets for newbies.
I’m here talking to Dan Gramza about something I’ve been wanting you to teach me about. I’m interested in the grain market, but frankly I don’t know anything about it. I know you traveled and toured the exchange 30 years ago.
You go way back in this.
Yeah, I do a bit.
You can actually tour the exchange at one point.
That’s right, and if you look at some of the characteristics, let’s talk about that point. For example, let’s talk about Minneapolis Grain Exchange. People always think about the Chicago Board of Trade, which is important. If you look at soybeans, corn, wheat, that’s where a lot of that product moved. But If you talk about wheat, you need to include the Minneapolis Grain Exchange, as well as, the Kansas City Board of Trade as well, but Minneapolis.
Here’s what I remember, Rob. At the Minneapolis Exchange, going back 30 years, they had a couple of things that fascinated me. One, they would actually physically look at the grain, in this case wheat; that was their product. So, they had these large windows on the side and those large windows weren’t there just to get a view to the outside, it was for natural light. They had these tables set up, and they had what they called a thief and the thief they would put into the railroad car and pull it out. They’d get a sample of that wheat in that car.
And you’d look at the product?
And they’d put it in a pan, a pan about maybe six or seven inches in diameter, about an inch high; a pie pan. They’d put that in there and then the traders in the room under natural light could view that product line. That would give them one way to assess the wheat that came out of that railroad car that may be part of a delivery process that they’re going to look at.
It is amazing.
That’s absolutely amazing.
We’re not doing that so much today when we go around the world.