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IntroductionandMarketsFinancial IntroductionandMarketsFinancial

IntroductionandMarketsFinancial - PDF document

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IntroductionandMarketsFinancial - PPT Presentation

relationshipbetweenIntroductionandMarketsFinancialdemandethanolplantFromhundredsthedecadeimpactfuturesHoweverimpactthedemandimpactcornsignificantharvestbumperpartlocalconcernworldnotbutlocalpricepredi ID: 891277

nearby basis 2007 2011 basis nearby 2011 2007 crop price years week october introductionandmarketsfinancial cornfutures avg cash futures soybean

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1 IntroductionandMarketsFinancial relation
IntroductionandMarketsFinancial relationshipbetween IntroductionandMarketsFinancialdemand:ethanolplantFromhundredsthedecade.impactfuturesHowever,impactthedemandimpactcornsignificant.harvestbumperpartlocalconcernworldnot,butlocalprice ‐ predict.Basis,predictable.predictablebecausemusttogethermonth.becausecontractrealcontract ‐ futuresbasis             ‐        $0.35(or"under")futuresbasis 

2                     
                    industry,practicequotesthepricestheirtradinggoes100merchandisers,dominatedhedgers.position.concernedbecausetradetypicallypricescents"under"language.Traderstalk"strong""narrow"timebetweengetslesspositive,"strengthened"“narrowed.”betweencashfuturesgetsnegative"weakened" IntroductionandMarketsFinancialExamples:CornFutures Example:CornFutures deliverydeliverypoint(e.g.specificIllinois

3 soybeans),basisconvergence.pricesconverg
soybeans),basisconvergence.pricesconvergebecauseprivilegedeliveryfuturescontracts.deliverymonth,(e.g.reflectcostsdemandhedgersopinionmonthsahead.Successfulhedgers ‐ producers,merchandisersmustunderstandthatexamineseasonalchangeswheatMinnesota(KeepmindthatchartslessnearbyfuturesThenearbyfuturescontractchanges.28,contractthecontract.it’scontract.) IntroductionandMarketsFinancialcornpricespricesbushelOctoberhighbushelc

4 hartreadilydiscerniblehand,nearbydistinc
hartreadilydiscerniblehand,nearbydistinctpattern.centsundercontract.thebasiscentsunderOctober.occurred2010).Afterharvest,centsunder.strongestpoint,centsmidsummer,thebasisbegins.perfectlypredictable.apparent,butmuchprice ($1.00)($0.90)($0.80)($0.70)($0.60)($0.50)($0.40)($0.30)($0.20)($0.10)$0.00OctPipestone Nearby Corn Basis, 2007-2011 Crop Years(first week October 2007-2011 avg Nearby Basis = Cash Price -Nearby Corn Fu

5 tures IntroductionandMarketsFinancialOve
tures IntroductionandMarketsFinancialOverfivepricesvariedbushelbushelvolatility,pattern.basisweakestOctobercentsundercontract.rangecentsunder.latemidsummer,basisbegins.perfectlyapparentbutmuchlessfuturesseasonal ($1.20)($1.00)($0.80)($0.60)($0.40)($0.20)$0.00OctPipestone Nearby Soybean Basis, 2007-2011 Crop Years(first week October 2007-2011 avg Nearby Basis = Cash Price -Nearby Soybean Futures IntroductionandMarketsFi

6 nancialThewheatgenerallypredictableandqu
nancialThewheatgenerallypredictableandqualitychartpatternAugust(harvestthebasiscentsnearbySeptembercontract.pricepricefollowingSummerperiodharvestdistinctseasonalpattern.suppliesplentifulthestoragehigh,pricestradefuturesTheweakest(orcroppeakslate ($0.50)($0.40)($0.30)($0.20)($0.10)$0.00$0.10JulyCrookston Nearby Spring Wheat Basis, 2002-2011 Crop Years(first week July thru end of June) 2002-2011 average Nearb Basis Pri

7 ce -Nearb IntroductionandMarketsFinancia
ce -Nearb IntroductionandMarketsFinancial statementsaboutbasis patternssimilarnext. patternsgenerallywheat. demandgraintheprincipal availabilityanotherfactor invertedmarkets. hedgers,basismoneymakingopportunity. benefitknowingTheonlyknownumbers.notesimpactmightincludeincreasetransportationrates,etc.tabletheexerciselocalChallenge.Trackingbasishealthyexercise,numbersenoughindicateresourcesGuideOilseedFuturesOptions(handbo

8 ok),http://www.cmegroup.com/trading/agri
ok),http://www.cmegroup.com/trading/agricultural/selfhedginggrain futuresoptions.html trackingtrackcrop(s)needed. IntroductionandMarketsFinancialTracking                                                                                                                                                 Â

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