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<p>[QUOTE=&quot;justafarmer, post: 1479638, member: 3926&quot;]Volume is an indicator of liquidity - the ability of easily entering and exiting the market. Liquidity is directly related to the interest placed in the market with the intent of making physical delivery as it represents the risk of getting hung. If all contracts mandated delivery the only way the farmer in your example above can close his position is through delivery else you produce a factor less than all. The same would hold true for any new interest (initial short position). If all shorts mandated delivery then a short position has zero liquidity. Speculators could not initiate a short position due to the fact they do not have the resources to make delivery. The only way they could enter the market is by buying an interest (a long position). There is no distintion made on the trading floor as to whether the contract being traded is a new interest or an established interest. They are traded as equals. Corn futures are traded on the floor for 2 1/2 years. Everyday new interest is placed (opened) in the market and established interest are removed (closed). Open Interest is a net factor tracking the rate new interest is being opened in relation to established interest being closed. </p><p><br /></p><p>It is probably best if we address this issue from a different perspective. Yesterday july 12 Corn open interest stood at 22098 contracts. Five trading days ago open interest was 117167. A decrease of 82%. I don&#039;t know what the peak open interest reached over the last 2 1/2 years this futures traded but yesterday open interest for Sept 12 futures stood at 429196 contracts.[/QUOTE]</p><p><br /></p>

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