B3o—Lancaster Farming, Saturday, February 27,1982
Farming’s Futures
By David K. Sauder
Commodity Advisor
Trade Tech, Lancaster
This week we will continue to
clarify the organizational struc
ture of the Chicago Mercantile
Exchange.
In particular, we will be looking
at the way trades are cleared. The
clearing house, as this department
is called, is unique in the financial
world and is the foundation of the
exchanger’s financial integrity.
Daily Procedure
All transactions on the Exchange
without exception, are made m the
names of the clearing members.
The Clearing House, therefore,
deals directly and solely with the
clearing members of the Ex
change.
At the close of each day’s
trading, every clearing member
submits a trade confirmation
record on a computer card for
every trade executed on behalf of
the firm or its customers. Every
one of these trades must be
“cleared,” i.e., verlified and
guaranteed, by the Clearing
House. The trades may be
“dailies” (e.g., contracts bought
and sold or sold and bought back
during the day,) or “overnights”
(contracts carried for more than
one day).
M.H. EBY, INC
Mamrtactyrer of All AMnum Track Bodies
Livestock, Grain & Bulk Feed
Distributor of
Blue Ball, Pa.
Customers' names do not appear
on this trade-confirmation record
since the Clearing House treats its
members as the buyers and
sellers. The brokers who executed
the trade are identified along with
the number of contracts, price,
commodity traded, and the
delivery month.
The trade-confirmation cards
are matched (verified) by
Clearing House computers to
assure that the clearing members
on opposite sides agree. All un
matched cards are returned to the
respective clearing members for
reconcilation, and corrected
confirmation cards are submitted
to the Clearing House. All tran
sactions must be "cleared”
prior to the next day’s market
opening, so there is never a lag in a
firm’s transaction recording,
unlike the practice in many other
areas of business.
At the end of the daily clearing
process, the Clearing House
compiles a "trade register” for
each clearing member. This
register itemizes by commodity or
other instrument “open” long
(contracts bought) and short
(contracts sold) positions of the
Aluminum Livestock Body
uj^yyi
Sales & Service
MARTIN’S
BARN-DRI
Use in any stable or animal
pen that has a tendency to
become slippery when wet.
• Cow Stables and Runways
• Hog Pens
• Sheep Stables
• Dog and Cat Kennels
• Chicken Houses
• Other damp areas
See your local dealer.
Refrigerated Trailers
717-354-4971
U.S. farm organizations unite
ATLANTIC, IA. - Farm
organization representatives met
her recently ami agreed on the
necessity ol parity tarm prices to
improve the overall economic
situation, in both the stale and the
nation.
Leaders from the lowa Farmers
firm, the “daily” transactions
made and offset, and the price at
which each trade was made.
The Clearing House also com
putes for every firm a daily
“futures recap ledger” which
tells:
How much money it lost or
gamed as a result of the day’s
trades;
How much mohey it is due or
owes as a result ot the open
positions held by the firm and
resulting from its "daily” tran
sactions. (Open-position com
putation is made by evaluating all
positions on the basis of the day’s
"settling price,” which is the price
established for every commodity
at the close of trading.)
How much "margin” money,
if any, is due from the firm to
secure its open positions.
£very clearing firm is advised
what the daily market activity has
either cost or gamed from the firm
and its customers. (To be con
tinued next week.)
Send your questions about
futures trading to Farming’s
Futures, Lancaster Farming,
Newspaper, Box 366, Lititz, PA'
17543.
to stop foreclosures
Union, the U.S. Farmers
Association, National Fanners
Organization, Kural Iowa; and the
American Agriculture Movement
ot lowa unanimously endorsed a
statement petitioning Congress
and the U.S.D.A. to immediately
implement a farm program with
significant increases in support,
loan rates, with the eventual goal
of full party.
“Because Parity tarm prices are
necessary to improve the
economic situation and reduce
unemployment in both the slate
and the nation:
"We petition the Congress and
U.S. Department of Agriculture to
immediately enact and implement
a comprehensive tarm program
with significant increases in
support loan rates and an eventual
goal ot lull Parity. This program
must be based on detinue price,
production, and conservative
goals.
—Support loans should be in
dexed to true farming costs;
Production should be con
trolled to maximize the con
servation- of the productive
potential of our soil thru effective
set-aside programs and other
measures to assure sod con
servation;
An adequate reserve program
should be administered to protect
consumers from potential shor
tages with release trigger prices
solidly pegged at full parity levels.
"This demand must be worked
tor politically through various
strategies, including: coalition
work with other organizations and
groups; state legislation;
collective bargaining, direct sales,
and other marketing tactics; set
asides and holding actions; and
public demonstrations and
protests.
"Until this adequate tann price
program is established and the
agricultural economy
strengthened, there must be a
moratorium on all forced farm
sales, including foreclosures and
forced bankruptcies. All lenders
must negotiate in good faith with
tanners and their representatives
to keep them on their land and
operating.”
"You can't continue to depress
the largest industry an the nation
farming without pulling the
whole economy into another Great
Depression, ” said George Naylor,
Churdan area farmer who
represented the U.S. Farmers
Association at the meeting. "High
unemployment, small business
failures, high interest rates and £)
government deficits are a direct
result of farmers nut having the
cash in hand from their farm
products.”
A hotline to provide assistance to
any tanner or small business in
danger of foreclosure from Far
mers Home Administration or
other lenders was established.
Anyone needing assistance should
call the lowa Farmers Union at the
special toll-tree number HJOO-532-
1114.