MN | Bengal Stripes - 9/16/2014 06:33
Adam Smith's invisible hand of supply and demand determine prices, not contracts on the Board of Trade. Contracts on the Board are wagers on the price movement from the initiation of the trade to the offset. Prices would be identical in the cash market with/without a futures market. The opportunities to hedge 3, 6, 12, 24 months out would be severely curtailed without a futures market and therefore it performs a positive economic function.
Yes, what Bengal said, it comes down to supply demand, remember 8 dollar corn? It would not have happened without production problems, supply was limited. |