How does the futures contract that speculators buy or sell for wheat originate? - wheat contracts
I know that the "cash price for wheat is that which, by the farmer published in a grain elevator, and can not) an end-user (bakery on site for immediate delivery available. And this is the future price of wheat is a speculator, which I, as a "lock-in can now now to buy or sell a futures contract.
But the contract that I can buy a long position in wheat for delivery in about 6 months to hold, as it is being committed? If the agreement between a farmer and a baker who is true, even if his way into a futures market to speculate that I have on? What if? that all contracts for a given month is quickly consumed, because there are many speculators who try to be more real baker Farmers Market hedge against adverse price? If yes, then how is it possible, all the speculators who try to guess what place is the price in the future? Ugh! Matter of time ... I'm sorry.
Wednesday, January 6, 2010
Wheat Contracts How Does The Futures Contract That Speculators Buy Or Sell For Wheat Originate?
3 comments:
The first reaction is pretty good, but not completely. Apart from hedgers (farmers who can work in a given month and bakers who buy in a particular month) would like to offer a futures contract would like to be created from scratch. As a speculator can I sell a contract that I did not intend to offer, too. Before the date of delivery, I have to buy again, "destroy" them. My room is a guarantee against my contract to deliver, and ensures that change management cntract view is all the same shortsl sufficient each day and the driver Helb margin to cover the possible moves for the next day.
Period are not like stocks, where a person has beneficial ownership of shares all over again. With futures contracts are created and destroyed continuously during the trading period.
There are a finite number of futures contracts. It acts as a transaction in which a certain number of shares.
Buyers and sellers can introduce new futures, some only on the price and consumption of trade.
Producers sell wheat for future delivery contracts locking in the price he is to the harvest. The producer has to deliver grain in the contract price on the specified date. The contract value may increase or decrease the value of wheat market, and speculators are based mainly on price changes. The manufacturer receives money from the sale of the contract and can be used to pay for seeds, fuel and equipment. He also receives a fixed price for the harvest, when they are delivered.
The requirement that the manufacturer is the contract is not a specific user. The contractor will pay for transportation if you are against the supply. The wheat harvest in the U.S. is huge, a few years, the silos are full and must be stored on concrete slabs and covered with tarpaulins. The Ministry of Agriculture is the negotiation of agreements with foreign governments is a market for the surplus by the operators of grain elevators instead of create. Availability was not a problem since the time of the great drought of 1930.
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