C. Picciotti,
I'm not sure what you're trying to prove. Obviously farmers are not the main players in the futures market. They do buy futures. The advantage of a future is that you can easily close out your position. I'm sure ADM, Purina and grain elevator operators use futures more than farmers do, but I don't think I said anything different. Farmers also use options on futures. It's just good sense. I'm also sure that grain inventories are not like, say, gold or silver inventories. Grain goes bad. All the wheat in all the inventories eventually is consumed or turns to dust.
The point is that punters are not in the business of holding grain. They're in the arbitrage business. They certainly trade against the buying and selling preferences of producers and industrial consumers, but they can't alter a market over the long term unless they are willing to get in way deep (the Japanese copper scandal). So, I would say that anyone in the commodities business knows that the trading pits are where the prices are set and acts accordingly. The pits aren't there to do anybody any favors, but if I'm a Kansas wheat farmer and I don't have a hedging strategy on my crop, I'm an idiot. Forward contracts are clearly not an adequate hedge. In a low margin business you've got to protect the up-side as well as the down-side. A farmer certainly can't afford to assume her bumper crop will mean a lower price come harvest and lock in a price on a forward contract. She's got to have a strategy to take as much advantage as possible of a good crop. She needn't be playing the futures market in expectation of making a delivery on a contract. Her business is being long wheat, so she can go short wheat as a hedge or go long wheat at a strike price above her forward contract with an option or whatever.
Obviously big inventory players are the people who set the upper and lower limits of a trading range, however, everybody in the wheat business is in the same business. If your argument is that there is a deflationary bias in the trading pits because big consumers of commodities rule the day, that's really just an argument for more punters. The more the punters try and go along with the pressure the big fish put on prices, the more up-side momentum there is when the price bottoms. Besides, commodity prices are really pretty stable compared to other prices in the economy. Ten percent moves in commodity prices are big news. Ten percent moves in stocks are an every day occurrence.
peace