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Pit bullish

A group of cotton producers found an occupation more hectic than farming during a visit to the New York Board of Trade (NYBOT) this summer.

The growers saw deals sealed in NYBOT's trading pits and then mixed with commodity traders during a special mock trading session in the pits. The sessions were held prior to the Cotton Roundtable, an annual Web presentation of market analysis sponsored by the Ag Market Network, NYBOT, Farm Press Publications and Bayer Crop Science.

The group — including growers and representatives from Extension and industry — visited NYBOT's cotton futures trading pit with about 15 minutes of trading left. Noted Senath, Mo., cotton producer Charles Parker, "It was a madhouse. I don't know how they do it. But they had some traders in there with us and they showed us how they operated."

The experience "gave me a better understanding of how the process works," Parker said. "Farmers have a tendency to think it's all collusion and they're all ganging up on us. It's not. They're all independent traders trying to make a living based on the knowledge they have at the time."

NYBOT then treated growers to a more-subdued mock trading session where growers became commodity traders for a while.

Rubbing elbows with the men and women who discover commodity prices was revealing for Parker. "When a cotton producer fixes some cotton, the transaction hits that floor and can make an impact on things, depending on how many bales are traded," Parker said. " Ican understand how every little trade impacts the market."

According to Tom Walker, assistant vice president marketing at NYBOT, the mock trading session "was chance for growers to stand in the pit and see how trading is actually done. It gives you a new respect for these guys on the floor trying to fill these orders."

The growers then sat in on the Cotton Roundtable which featured a panel of cotton market analysts who discussed cotton fundamentals and pricing strategies. The discussion followed USDA's July update on cotton supply, demand and production.

Growers from all around the United States listened to the live broadcast on computers or by telephone.

The mock trading session was held at NYBOT's temporary facility on Long Island City in New York. The building which previously housed the exchange at Four World Trade Center was destroyed during the terror attacks of Sept. 11, 2001.

NYBOT learned valuable lessons about how vulnerable it was to catastrophic events after Sept. 11 and in 1993 when a bomb exploded under one of the two towers at the WTC.

Prior to the Sept. 11 attack, all of NYBOT's facilities were located at Four World Trade Center and a backup trading floor was maintained at Long Island City. "When we lost Four World Trade Center, we lost all the computer servers and all the backup on the administrative side," Walker said. "On the trading side, everything was backed up on Long Island City every day."

Today, trading still takes place at Long Island City while a permanent facility is being readied at the New York Mercantile Exchange, located in the financial district on Manhattan Island, a short distance from the old World Trade Center site.

Administrative offices are maintained on Hudson St. in New York. Maintaining separate facilities for administration and trading as well as a backup facility isn't a fail-safe hedge against future disasters, noted Walker. But it does reduce the risk that that a single strike could decimate the exchange.

"As an exchange, you can't afford to be out of business, no matter how big you are," Walker said. "You have to get back into business within two or three days. Markets aren't going to stop trading. They'll move somewhere else and you can't move them back then."

Walker noted that no NYBOT employees were hurt or killed in the Sept. 11 attacks. But few lives were untouched by the tragedy and many were changed forever.

Commenting on employee sentiment prior to the first anniversary of the Sept. 11 attacks, Walker noted "everybody will react differently. It's a very personal thing. One of our employees has children and he's going to work at home that day. On Sept. 11, his wife was away from home, he was stuck downtown and his child just didn't have any place to go."

On that day, Walker's train had just pulled into the station in the basement of the WTC, right after the first tower was struck. "When I got off the train, I could smell this kerosene-like odor. When I got upstairs, there was smoke in the hallways.

"New Yorkers are so funny," said Walker, who is from Texas. "They were watching it on television. I looked at it and thought, 'this is right above our heads.' We went outside and were standing beside the South Tower when the second plane hit."

Realizing that he was standing in the debris path of the explosion, Walker ran from the WTC plaza as quickly as he could. By then, there was no doubt in his mind then that two planes hitting the twin towers was not a coincidence.

"People had three reactions to the event," Walker said. "One was total paralysis. There were people on the street who broke into tears and just stood there. Another reaction was like mine, to get as much distance between me and that building and any other potential targets as quickly as possible. The third reaction was this curiosity of getting as close as possible to see what was going on. Those were the unfortunate ones. A lot of people lost their lives when that building collapsed."

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