Most traders couldn't care less about the price of a bushel of wheat. They are never going to actually see any of the grain that they purchase. The vast majority of trading at the Grain Exchange is in the futures markets. Investors are essentially hedging bets on whether the price of spring wheat will go up or down, in hopes of selling the contracts a short time later for a profit. If a trader buys a contract of July wheat at $3.2125, for example, he is looking to unload it at $3.22 or $3.23, thus securing a profit.
In other words, the men in the Pit are the farm-belt equivalent of day traders. "People here are risk takers," says Helfand. "This is a casino. There's times when guys are making six figures and there's times when you're lucky to rub two nickels together." But instead of gambling on the minute movements of Qualcomm stock or divining the intentions of Fed Chairman Alan Greenspan while squatting in front of computer terminals on Long Island, they spend their days studying weather reports and speculating on the fertility of the spring wheat crop in Saskatchewan.
Like their day-trading counterparts, the players in the Pit could soon find themselves hawking wheat from a desk. The Grain Exchange has tried to get ahead of the electronic trading curve--with mixed results. In October the nonprofit announced a partnership with San Francisco-based Internet company ePIT to develop the world's first Internet-based commodities exchange. In theory, traders would be able to play the grain markets with the click of a mouse. In response to the announcement, the price of memberships at the Grain Exchange soared to $25,000. But the project never got off the ground. "It just became obvious that there were differences between us that weren't gonna let it happen," says John Miller, the board chairman.
Richard Friesen, president of ePIT, says that the negotiations broke down over a disagreement about who would actually operate the online exchange. He notes that ePIT is not interested in running the day-to-day operations but merely wants to provide the technology. "We want to sell the picks and shovels to the miners," Friesen says. "We don't want to be miners ourselves."
James Lindau, president of the Grain Exchange for 12 years, retired at the end of May and the board of directors is in the process of searching for a replacement. Miller says one of the key attributes they are looking for is someone who can help the Grain Exchange adjust to changes in technology. "We continue to work feverishly to find a technology partner," he says. If online trading becomes the rule for commodities trading, the Pit will be relegated to a mere relic of the past--like ticker tape and men in gray flannel suits.
By Wednesday's end, spring wheat stages a modest rally, closing at $3.2425 per bushel. Jerry Helfand is able to unload six contracts that he'd bought at an average price of $3.215 for $3.24. The transactions yield a tidy $750 profit.
Even so, Helfand is not optimistic about his futures. "Whether I'll be doing this in three years remains to be seen," Helfand says, dejectedly. "Sitting in my basement with fuzzy pink slippers looking at a TV screen doesn't sound like a lot of fun. I can do that being a lawyer."