Orange juice futures trader Dominick Minervini spent years fending off comparisons to Dan Aykroyd in "Trading Places," the 1983 movie that thrust the tiny market into the public consciousness.
"If I said I trade orange juice, everybody would say, 'Oh, it's just like the movie,' " said Mr. Minervini, who has been trading for more than two decades.
But while most days in orange juice trading are a far cry from the movie's iconic scenes of double dealing and frenzied trading—for one thing, all futures trading is now electronic—the past few days have seemed eerily similar.
As an arctic chill spread across the main growing regions of Florida, orange juice prices began a wild ride. After soaring 7% on Friday, they plunged on Monday to finish down 19.3 cents, or 13%, at $1.3185 a pound, causing big profits for some and losses for others. Early Monday morning, as crop damage appeared to be less than feared, prices dropped as much as 20 cents, their exchange-imposed daily limit. Prices quickly moved back up to trade down less than five cents, before again heading lower. "It's scarier than anything. It's like the Wild West," said Mr. Minervini, who once was a trader on the floor of the commodities exchange but now trades from his New Jersey home. On Monday, Mr. Minervini traded 70 contracts of orange juice, a big day for him, and made about $8,000. "It's not a bad day," he said.
Monday's trading volume was estimated to be 12,836 contracts, about five times 2009's average daily volume of 2,607, according to the exchange.
In "Trading Places," Mr. Aykroyd's Louis Winthorpe III and Eddie Murphy's Billy Ray Valentine join forces to get even with Mortimer and Randolph Duke, thwarting their attempt to corner the orange juice market and leaving them bankrupt. The climactic final scenes show frantic traders screaming out orders on the floor of the exchange, seeking to halt their losses.
But since 2008, frozen orange juice futures contracts have been traded electronically. Each futures contract represents 15,000 pounds of frozen concentrated juice, or about $20,000 in value based on Monday's closing prices. Traders like Mr. Minervini, who once jostled in the New York Board of Trade trading pit, now sit behind a screen, placing orders with the click of a mouse, from anywhere in the world.
The number of contracts outstanding on the ICE Futures U.S. exchange amount to about $800 million. That makes the market a pipsqueak compared to most other commodity markets. There are, by comparison, more than $220 billion in futures contracts open for crude oil, the most active commodity.
For market veterans, the past few days left plenty of room to make money. Boyd Cruel, a senior market analyst at Vision Financial Markets in Chicago, saw prices soaring on Friday and believed they were headed for a collapse, even amid forecasts for arctic weather conditions.
Going into the weekend, he placed bets that prices would fall.
"Usually when something makes all the headlines and is on the television news, that's often a sign of a top in a market," said Mr. Cruel, who has been trading orange juice and other commodities since 1996. "These aren't things they teach you in a textbook, but are things you observe from experience. I'm one happy camper right now."
Over the past few years, the orange juice market has dwindled along with coffee and cocoa, as electronic trading has scattered most of the floor traders who used to provide a large chunk of liquidity to the markets.
In 2009, total trading volume of orange juice shrank to 656,995 contracts, down 8% from 2008 and down 29% from 2006. The shrinking volume makes it easier for traders to push prices up and down, increasing volatility.
Processing company Louis Dreyfus Commodities, one of the world's largest, is among the top orange juice traders. Prudential Bache, UBS Securities, J.P. Morgan Chase & Co. and Term Commodities also are active.
But juice brokers and growers often just use the market as a gauge of price direction, rather than trading directly on the exchange. Webb Tanner, president of Food Partners Inc., a juice broker in Florida, said he monitors futures prices every day and uses it as a pricing mechanism. But he doesn't trade the futures markets. "You don't have an extremely liquid and deep market like many other commodities," Mr. Tanner said. Instead, the company sets prices as juice is delivered.
Orange juice futures began trading in 1967, 20 years after the invention of frozen concentrate, which is made by heating the juice then concentrating it in high-vacuum evaporators before freezing it. Trading initially began on the New York Cotton Exchange before moving to the New York Board of Trade, which was bought by ICE.
Mark Julias, market strategist and trader at brokerage house Lind-Waldock in New York, who has followed the market for 10 years, said he was shocked by the recent swings in prices. The swings were bigger even than those seen in the midst of a hurricane, he said.
Some of Mr. Julias's clients saw the slump on Monday as a chance to buy.
"I had some retail customers that were nibbling near the lows of the day. They'd say, 'Let's buy orange juice down here because I don't think this thing is going to fall apart,' " he said.
Mr. Julias typically doesn't trade during the winter months but on Monday he bought March orange juice at $1.3290 a pound and said he still holds some of those positions.
Mr. Cruel said he is a "fairly active" trader who always has a position in orange juice but doesn't necessarily trade every day. Unlike the past few days, when the market's trading volume jumped 35%, orange juice typically is a sleepy market.
"I'm involved, but sometimes that market just does not move," he said.
Originariamente Scritto da Hellvis 2006
Riferimento: TITANIC (il transatlantico del BS)
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