By day, Joanna trades on the Chicago Mercantile Exchange—“the Merc.” When she gets off work, she thinks about food production systems.

(by danperry.com via Flickr)

Chicago is known for trading all of the agricultural grain products, and actually that’s about it. Meats too, that’s part of the agriculture. So pork bellies, feeder cattle, live cattle, is the main trade. All the grains. All the grains are out of Chicago. Energies are out of New York, metals are out of New York, though there were some metal contracts that were traded on the Chicago Board of Trade, only because one exchange sees how successful another exchange is in trading those products, and then thinks, Well if we can just have a little bit of a contract that is slightly different, like the size of the actual contract—like the weight of those metals is a little bit different than the New York markets—maybe then they’ll want to trade them. Historically, it made more sense to trade grains out of Chicago than it did out of New York because you would then have to transport the grain all the way to New York and then all the way back out to the prairie, the farmland.

I don’t trade a lot of grains, so my clients aren’t grain hedgers and producers, though there is another desk at my firm that that’s all that they do, is trade grains. Because I’m trading upstairs, and not on the floor of the exchange, it’s another sort of step away from what I’m actually doing and from the process of the commoditization of these goods. I mean how often we actually take these futures to delivery is very very few and far between. I can count on one hand in the last four years the number of times I know of that someone has done that. So the actual history of the commodities exchange and what it was originally created for feels very distant to me. I’m trading for the financial guys and not as much for the producers and the hedgers. I’m more in the sort of corporate/financial Wall Street world.

The futures market wasn’t originally created for only delivery purposes. It was a way to lock in prices for farmers, so that you can financially trade the commodity. But then sometimes the delivery process is completely separate, or when you’re actually buying and selling your grain, physical grain, that’s a different process than what’s happening on the exchange. I still think that futures are doing what they should be doing, but I fight internally about what the role of speculators is. Of course, it’s really hot right now to hate the speculators and think that they’re ruining the markets. As they’re all my clients it’s hard for me to hate them, right. They paid for this coffee. But on the other hand, there is a lot of truth in the idea that if you didn’t have people that were just trading for the sake of trading, you wouldn’t capture fair pricing and the people that are physically trading the market, because they’re involved in the physical commodity, wouldn’t have the success in hedging that they have. It’s a conflicting sort of process, but most of the time I think that the markets are doing what they should be doing.

They’re providing a place for people to trade, to financially balance what they’re growing or what they’re producing, and they’re providing a place to offset risk for people, so that if the crop is destroyed or if there’s a weather disaster or something, those people still have income.

Did you ever learn the hand signals?

I did. [Laughs.] One very slow summer afternoon when I was an intern. All of the people that I work with, every single one of them has worked on the floor. They all started when they were 18, 19—like I did, ironically. Some of them have gone to college, but the typical story is that those guys never went to college and picked it up straight after high school because their cousin’s brother was in it and they needed a job so they started running tickets on the floor.

One slow afternoon, one of the older guys Jerry kind of popped up and said, Joanna it’s time. You gotta learn these signals now. I now work in a group with only about 7 brokers, but our original desk was 22. We’re sitting on something that looks like a long counter top facing each other, with screens in the center facing out, so we’re sitting across from each other but then with screens in the way, so sometimes your computer isn’t working or you’re doing something else and you need someone else to trade for you, and we still would have to yell at each other and sometimes flash. Sometimes the guys would still flash signals. They’d flash a signal at me, and yell at me, and I’d be like, What are you …? I can hear you, but I have no idea what your hands are doing. So I had to learn it.

It’s so ingrained in them to do that, because they were working on the floor for 20 years and then have only moved upstairs in the last five, so they’re still doing that. So I learned the signals, though I’ve never worked on the floor.