cows-n-crops - 11/21/2025 00:16
Pofarmer - 11/20/2025 20:51
Yeah, but you don't "hedge" a buy before you make it. Why would China buy the board before they make a buy? That just drives the price up. Someone explains how it makes sense to "hedge" the board, by buying futures, when you haven't bought the physical.
It makes sense.
They want to buy beans. So they buy beans on the board let's say at $10. They know when it is out there in the news that they are going to be buying physical beans the price is going up on the board. So the price climbs to $11 on the board and they sell making a $1.
The physical beans are now being bought at $11 but they offset that price with the $1 they made on the board and the physical beans end up only costing them $10.
If they hadn't 'hedged' on the board the physical beans would of cost them $11.
Clear as mud?
Bean sales
