Producers and consumers of wheat can manage wheat's price risk by buying or
selling wheat futures.
Not exact matches
The history of stock
futures, in general, dates back to the 1840's, when regional farmers met in Chicago to
sell wheat to dealers for cold, hard cash — a practice that was dubbed as «spot» pricing.
For example, a speculator who buys a
wheat futures contract for $ 4.00 per bushel and later
sells it for $ 4.50 per bushel earns a profit of 50 cents per bushel.
The group of interdisciplinary researchers from the University's Grantham Centre for Sustainable
Futures, analysed the complete process from growing and harvesting the
wheat; milling the grain; producing the flour; baking the bread and the production of the final product, ready to be
sold by retailers.
Before the advent / history of
futures trading, any producer of a given commodity (e.g. a farmer growing
wheat, soy or corn) often would be at the mercy of a commodity dealer when it came to
selling his product at his / her desired price level.
A
futures contract is a common derivative: A farmer might agree to
sell wheat next spring for a price set today.