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Somerville, Indiana | in one way, yes. Hedge would be to offset your position say if you have corn in the bin [5000bu] you would be as they say long on corn, and could hedge that by being short a futures contract [5000bu]. That isn't speculating as you have the grain to back up your position.
also, a hedge could be a hedge to arrive [HTA] at the elevator of your choice by setting the price of futures that happen to be on the board at the time of anticipated delivery. At a later time, preferably before delivery, you could set the basis - hopefully better than at the time you made the contract with the elevator.
there was a lot of farmers and elevators [more so] burned in the 80s when they carried the HTA into the next crop year and price worsened by a bunch. They are watched closely now and prohibited from carrying a HTA forward only one time, and has to be in the current marketing year. | |
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Define what Hedge means???
