Futures can be also used to speculate on the price of a commodity or on the direction of interest rates or equity benchmarks like the S&P 500 Index. Who are the futures “players”? Exchanges. Futures, like stocks, are mostly traded electronically on exchanges (CME Group is the largest U...
Answer to: What is the difference between a price ceiling and a price floor? What effect is the same for both a price ceiling and a price floor? By...
. You don't want to risk higher prices if there's a smaller crop. So you buy that futures contract for 5,000 bushels of corn at $4 each. If prices fall, you lose because you pay more than the prevailing market price. But if they skyrocket, you're still paying only $4 a bushel...
Tanimura & Antle, an employee-owned family farm, who is a grower-shipper of premium quality fresh produce, has been a leader in the produce industry for over three generations. Known for its commitment to quality and innovation, the company has established itself as a trusted supplier of premi...
When I mention we raise waxy corn on our farm I'm often asked, "What is waxy corn?" In this post I explain what it is and why we grow waxy.
During that time, the local corn “basis” – defined as the difference between the cash price in a specific location and the nearby futures price – weakened immediately and significantly. In the four months while the plant was idle, the local basis averaged 15 cents per bushel less than ...
About 60% of the propane that's produced comes from natural gas wells. The rest is a byproduct of crude oil refining. The price of propane fluctuates seasonally and like all energy sources has been rising in price. Propane has been used since the 1930s, so it has a long history as a...
An implicit cost or imputed cost is the opportunity cost that is incurred when a producer uses a factor already owned by them in the primary production process, and therefore, gives up the value that particular factor could have generated otherwise....
Suppose a producer has an abundant supply of soybeans and is concerned that the commodity’s price will drop soon. To hedge the risk, the producer negotiates with a financial institution to sell three million bushels of soybeans for $6.50 per bushel in six months. Both parties agree to set...
Meanwhile, if an investor owns a put option to sell XYZ at $100, and XYZ’s price falls to $80 before the option expires, the investor will gain $20 per share, minus the cost of the premium. If the price of XYZ is above $100 atexpiration, the option is worthless and the investor...