A person is “long” a market if he makes money when the price moves higher. Likewise, if a person is “short” the market, he makes money if the price goes down.
If you have unpriced corn in the bin, you are long corn in the cash market. If you have corn in the field that is not priced, you are also long the cash corn market. A person who buys corn futures is long corn in the futures market. If you have a sold corn futures position, you are short the corn futures market. If you are long corn in the bin while short corn in the futures market, you have a “hedge” position in which the loss in one market is offset by a gain in the other market every day. Grain merchandisers trade futures to hedge their cash grain position.
This morning’s Chinese government’s Manufacturing PMI reported an improvement to 49.3 in July from 49.0 in June. The market expected a PMI of 49.2. The number shows China’s manufacturing economy is still contracting (less than 50 PMI) for the fourth consecutive month, but at the smallest pace of contraction the past 4 months.
The Chinese government’s Non-Manufacturing PMI declined to 51.5 in July from 53.2 in June. None-the-less, it is the seventh consecutive month of increase in services activity. Since China annually buys ~100 million mt of soybeans, ~20 million mt of corn, ~12 million mt of wheat and ~5 million mts of pork and offal, us farmer-types want to see China’s economy growing.