Commodity Challenge #1

Futures Price - Cash Price = ?

• Basis

• Hedging

• Spot Price

• Forward Price

The price the grain elevator will pay for a commodity now

• Spot price

• Basis

• Forward Price

• Futures Price

Which are options for farmers to manage their risk/protect against poor commodity prices?

• Crop Insurance

• On-farm grain storage (in grain bins)

• Forward Pricing

• Futures Hedging

Which is/are Cash Market(s)?

• Spot Price

• Forward Price

• Futures Price

• Hedging

Which is used to help farmers manage their risk for commodity price protection?

• Spot Price

• Speculation

• Basis

• Hedging

Which is used for commodity PRICE DISCOVERY?

• Futures Market

• Cash Market

• Basis

• Hedging

Which is where farmers actually sell and deliver their grain?

• Futures Market

• Cash Market

• Basis

• Hedging

If a farmer wants to store his crop on the farm, and deliver them in a future month to be paid in cash, which would s/he use?

• Forward Pricing

• Spot Price

• Basis

• Futures Pricing

If a farmer wants to be paid in cash for his/her crop immediately, which would s/he use?

• Forward Pricing

• Spot Price

• Basis

• Futures Pricing

Futures contracts are traded in:

• 1/4 cents

• 1/6 cents

• 1/8 cents

• all of the above