Lessons and Marketing Talks on Marketing Agricultural Products Volume 3 (Paperback)

This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated.1922 Excerpt: ... the exchange through their own employes without incurring the commission charges that must be met by non-members. Purchases of "sample" grain on the floor and of grain "to arrive" made during trading hours (9:30 to 1:15) may be hedged by selling futures immediately. But grain brought after hours by bids to country shippers or otherwise, cannot be hedged until the market opens the following day. On such purchases, the elevator must assume the risk of a change in the market over night or hedge before his purchases are made. Over-night changes frequently occur because foreign exchanges open earlier than ours, owing to the difference in time between other countries and this. Hedging an Export Sale Suppose a terminal elevator has a bid from a shipper or an exporter of $1.20 for delivery at a certain port. The future is selling at $1. The elevator is willing to make the sale on this basis, but cannot pick up cash grain to fill the order at once. Before the grain is secured, the market may advance. Consequently, when the elevator accepts the bid, it will buy futures as a hedge, figuring that an advance in the market before the cash grain is secured will be accompanied by a like advance in the future price. So long as the cash and the future prices do move together, the elevator owner can take his time in buying the cash grain. Why Elevators Buy Cash Grain Freely It is due largely to the terminal elevator companies that farmers are able to dispose of their crops practically as soon as they are threshed, if they so desire, without waiting for a consumptive demand to absorb them. It is the terminal elevators, chiefly, that absorb the excess of receipts over the current milling and export demand. Broadly speaking, during the fore part of the crop season, the terminal ...