A futures contract is a contract to deliver or take delivery of a commodity in some future month at a price determined by auction in an organized commodity exchange. The auction once occurred in a trading pit, but most trading has migrated to electronic platforms. The terms of a futures contract — delivery time, grade, […]
In a Post-harvest (or “Old Crop”) game you’re a producer and your crop has already been harvested, it sits in storage and you can make a decision to sell that in the cash market, that is, today’s market to your local elevator at today’s price…or in the Forward Market the Futures Market or the Options […]
I’ve taught a course on futures and options many times. The math is straightforward but many students struggle with the lingo. Let’s talk about bulls and bears, and longs and shorts. A market bull is some who thinks prices are going higher. Bulls use their horns to push prices higher. Bears think prices are going […]
A cash transaction is simply a cash sale of grain you own which is taken out of storage. For example: If you take today’s spot price for soybeans and you’re selling them for ten dollars a bushel and you’ve got 10,000 bushels of soybeans. You are going to price and deliver that to your local […]
The new Commodity Challenge is up and running! Here are five things you need to know about the new game and website. 1. Everyone must register anew with the new website. As before, registration is easy and free (game set-up also remains free thanks to generous sponsorship support from MN Soybean, Farm Credit and the […]
I received an interesting question about storage. Question: Ed, I farm corn and soybean in west central MN. I am very short on grain storage. Most of my hauls to the coop that I do business with are with in 6 miles or less, waiting time to unload has, for the most part, not been bad, […]
Like corn, the “spot” price for soybeans is $2/bushel higher than new crop bids (Southwestern Minnesota prices). This is a strong inverse, similar to levels seen in 2003/04, and higher than the inverse seen in 1996/97 (two years of note for strong inverses). I see two items of interest in this chart. First, in 1996/97 […]
…and it may take until mid-September before it happens. Nearby cash corn prices are $2/bushel higher than new crop bids (Southwestern Minnesota prices). This is an incredibly strong inverse, even higher than the inverse seen in 1995/96 – a year when the ending stocks situation in the U.S. corn market was even tighter than projected […]
On Saturday morning at 7:00 am, I am speaking at the Early Riser session at Commodity Classic in Kissimmee, Florida. I hope to spend some time on Thursday afternoon and Friday, roaming through the show at the Gaylord Palms Resort & Convention Center – and I hope to see you there. 
I have two things on my mind. One is the strongly inverted corn market. Nearby (old crop) corn prices have been running at a $1.50-2.00 per bushel premium to 2013 new crop bids. Six months from now there will be no inverse because old and new crop will be the same thing. Will nearby prices […]