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| Generally lender agreements require hedging all contracted grain. If a major commercial, a guru parked generally in the basement or top floor makes the net position decisions & in this type of market I suspect would be fully hedged. If they chose a net position, it would be a small per cent of their total book. When grain is priced (delivered) the usual transaction is an exchange of futures..user or exporter exchanges long futures with the origination short hedge...it is an Ex-pit transaction priced within the day's price range & no actual buying or selling occurs. Usually Users or Exporters buy huge quantities of futures in the seasonally weak period which is used for pricing. A very real consideration in this type of market is the cost of carrying margin money. If local credit lines are short, in dealing with beans for example, rather than hedge the local may just sell back-to-back to a processor or flat price to a processor depending upon whether the beans are for the distance future or close-in. | |
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Contracted Grain
