"We believe it should be based entirely on the current market price, which is $644 per ton, not the $680 per ton you proposed. This is completely unreasonable!" the Chinese representative stated righteously and undeniably at the negotiation table.
Indeed, these financiers before them were too excessive. The market price was only $644 per ton, yet they were attempting to sell at $680 per ton, and for a total of 1,000 tons.
Who ever heard of wholesale prices being more expensive than retail prices?
However, the financiers had their own reasons. They argued that if China's demand of 10 million tons appeared directly in the futures market, and there wasn't enough supply in the futures market, it would inevitably cause a surge in futures prices.
In less than a month, soybean prices in the futures market had already risen from $550 to $644, an increase of nearly $100, and this was without any large-scale procurement basis.
If China's 10 million tons of demand were all injected into the market at this point, it would likely push prices up by another $100, and it wouldn't be unusual for them to even reach $800 per ton.
Therefore, their offer to sell 1,000 tons at $680 per ton was practically a giveaway, an act of great benevolence!
The Chinese procurement delegation naturally rejected this argument. They frankly stated that since the institutions held 1,000 tons, it meant they had already begun stockpiling soybeans in advance, and even the high prices in the entire market were artificially inflated by these individuals.
If the Chinese procurement delegation didn't buy their goods, the market price could very well plummet instantly, and it was even possible for it to return to its historical normal price of $300 per ton.
"These Chinese are not stupid..." Kraft, who was secretly controlling the entire negotiation process, muttered to himself and then pointed out unceremoniously.
The fundamental reason for the price surge in the market was the global reduction in soybean production, and a fire that destroyed one-third of the US soybean reserves. These were the root causes of the soaring soybean prices.
They had never deliberately manipulated soybean prices. They had merely acquired soybeans in moderation for investment upon seeing the potential for price increases, just like the Chinese procurement delegation's attempt to acquire soybeans for speculation. These were all reasonable, legal, and non-interfering investment activities that did not affect the market.
The two sides engaged in a war of words, and the negotiations dragged on for three full days without reaching an agreement. However, this time Kraft expressed his satisfaction. He believed that intense price negotiations were normal, as it indicated the other party's strong desire to purchase soybeans.
As long as there was this desire, their soybeans could be sold.
Moreover, with the confirmation of their desire, prolonging the negotiations was a good thing, as it would lead to continuously rising soybean prices.
For example, after three days, the price had already risen from $644 to $660, while their quoted price, instead of decreasing, had increased from $680 to $690. They weren't afraid that the Chinese wouldn't agree.
As expected, on the fourth day, the Chinese finally relented, agreeing to $680 per ton and urging them to quickly sign the purchase agreement for 1,100 tons.
That's right, after these three days of negotiation, it seemed that more people within China were seeking to invest in soybeans, thus increasing the procurement volume from 10 million to 11 million tons. The entire alliance was overjoyed.
The more people from China entered the market, the more severely China's soybean industry would collapse. Their patrons behind the scenes would be even more pleased. These were all good things!
Therefore, everyone was happy. The only unhappy ones were probably those increasingly audacious short-sellers, who had already increased their cost basis to $500 per ton. They were truly a bunch of absolute fools who didn't understand the bigger picture.
Fortunately, by the last day, the short-sellers had quieted down. No more soybeans appeared on the market because, well, everyone understood the reason. It wasn't because these short-sellers had a change of heart and felt that Americans shouldn't rip off Americans, but rather that the short-sellers only had 4 million tons of soybeans, and now that all 4 million had been bought by them, there was no profit to be made.
They wanted to retaliate but had no recourse. Once they retaliated, their own businesses would also be affected. They could only try to console themselves with the idea of settling scores later.
However, this also led to another outcome: when the Chinese procurement delegation expressed their acceptance of the $680 offer, a faction within the alliance became displeased.
They argued that $680 was the price from four days ago. Now that the market price had risen from $660 to $690, their selling price should also increase from $680 to $710!
Indeed, the intentions of these people were understandable. After all, the efforts to absorb soybeans to maintain market prices over the past few days had resulted in significant losses for everyone, and their cost basis had increased. These losses had to be recouped from the Chinese.
But the problem was that the Chinese refused to accept this! This was treating them like fools. Thus, the previously agreed-upon negotiations devolved into a dispute. Moreover, this time the Chinese were more resolute, stating that the price of $680 could not be increased further, and if it were, they would collectively fly back home and forgo buying the soybeans altogether!
It was at this moment that Boss Huang, far away in California, glanced at the computer screen and smiled as he asked Hao Jianguo, "Jianguo, have we sold all the 4 million tons we borrowed?"
"Sold!" Hao Jianguo replied with a grin. "We borrowed them at $490 per ton and sold them at an average price of $630 per ton during these days. This way, we made a profit of $140 per ton. If the soybean price is pushed back down to $300 per ton, then who knows how much we'll earn!"
"By the way, Boss, I've made a new contact. He has another 1.3 million tons of soybeans. These soybeans are in Brazilian warehouses and were meant for national reserves, not to be easily moved. However, he knows a big shot in Brazil, and with just a word, he can sell us these 1.3 million tons of soybeans." Hao Jianguo said with a smile.
"Oh! What if they discover that these 1.3 million tons of soybeans are gone later?" Boss Huang asked curiously.
"No problem, just set it on fire. They're quite experienced at it!" Hao Jianguo chuckled.
"..." Indeed, such things were learned instinctively.
"No need. It will take at least ten days for the Brazilian soybeans to arrive, possibly twenty days after all the procedures. The procurement delegation is already doing their utmost. If we delay any longer, the deception will be revealed. Let's reel in the net," Huang He said calmly.
"Yes!" Hao Jianguo sighed, feeling a sense of regret. If Boss Huang hadn't been impatient and had really waited for these 1.3 million tons of soybeans, the entire situation would have truly collapsed, and Boss Huang would have suffered heavy losses.
This was due to Huang He's own greed, and had nothing to do with Hao Jianguo, as Hao Jianguo had perfectly orchestrated the plan until now.
"However, we can still buy these 1.3 million tons of soybeans and use them to help push over this domino effect!" Boss Huang said with a faint smile, then gently pushed a mahjong tile on the table, knocking over the entire domino arrangement made of 144 mahjong tiles.
In the past few minutes, Boss Huang had been busy arranging these mahjong tiles until they were in a state where they could be easily toppled, and indeed, they all fell.
——————————
"Boss, what is the bottom line for today's negotiation?" Every time negotiations with the Chinese procurement delegation began, the person in charge of the auction needed to inquire about the bottom line from Kraft.
Once the bottom line was reached, the person in charge could directly announce the deal.
"Seven hundred dollars!" After hesitating, Kraft finally stated the price.
"Seven hundred? This price is likely difficult. The Chinese have a very firm attitude. If it were $690, perhaps we could hold on a bit longer!" the person in charge said.
"Alas, this is not something I can decide alone!" Kraft shook his head. He and Hack both felt that $680 was sufficient and they should sign the contract and leave quickly, as they were beginning to sense many things were amiss.
Therefore, everything appeared to be going smoothly, the overall situation was in their hands, and market prices were firmly controlled, yet he was truly frightened.
So, everything that had happened previously was very normal. The time between the news of a procurement delegation emerging and the commencement of negotiations spanned over 20 days, during which prices had risen by nearly $200. Yet, this procurement delegation was still leisurely conducting negotiations. Was this normal?
This was highly abnormal!
Therefore, Kraft felt that $680 was enough and they should sign, but most of the institutions in the alliance were not satisfied with this price. After all, their cost basis was too high, and they needed to make more money.
"Fine, if it doesn't work out today, you represent our institutions and privately reach an agreement with those Chinese. Even at the price of $680, we can sell them 1.8 million tons!" Kraft decided to sell all the soybeans he had to the Chinese in one go.
As for the others in the alliance, he couldn't be bothered with them.
However, they waited and waited, but the Chinese who were supposed to be negotiating never showed up. By noon, they suddenly received news that the Chinese procurement delegation had collectively appeared at the airport, preparing to board a plane to Brazil.
It was rumored that a seller in Brazil was willing to sell 3 million tons of soybeans at $400 per ton, so the delegation had directly gone to Brazil to purchase soybeans.
"Why didn't you stop these procurement groups!" Kraft angrily questioned upon hearing this news.
"These Chinese acted very stealthily. They departed secretly at 4:00 AM and started processing their boarding passes at 6:00 AM. Our surveillance personnel were secretly asleep at this time and did not notice the actions of these Chinese."
"Then you could have asked customs to stop them and detain them!" Kraft said.
"It's useless..." the subordinate shook his head. "Because we previously instructed customs to provide them with all conveniences, customs not only did not obstruct them this time but also processed their clearance procedures at the fastest speed. We can no longer stop them!"
"It's over!" Kraft slumped into his chair, feeling that everything was finished.