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Red River Valley | Look at the reason for the failure in 95-96 it was not the HTA that was the problem but how People used them.
Many people used HTA's to try and capture gains across marketing years - what they did was when there was a .01 or .10 inversion from July to Dec. many people HTA'ed their production in the July figuring that by the time we got to July that the Inversion would go to a carry and they would pick up .10 to .15 cents a bu. on their corn and they would simply roll the July delivery corn to Dec. when this first started they were able to do it then some started doing it on 3 or more years worth of production figuring as the crop got made and prices dropped they would just cancel the HTA and pocket the profits well as with all great scheme's the first ones in did well the last got burned. the market tought the farmers that carry in any grain market is limited and inversions are not.
The HTA in and of itself was not the problem how it was manipulated was. | |
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I'm about as marketing basic as you get...
