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S Illinois | Hedging doesn’t require the actual holding of a physical commodity. It only requires a risk position. So when one has a cash position such as buying inputs or paying rent one has a risk on those costs that can be hedged.
For example airlines hedge fuel all the time. Not because they have that fuel on hand, but rather they have the risk of increasing fuel costs on their future needs.
Texas hedging is doubling up on the cash position/risk position aka long in the bin, long on the board. Or long in the field, long in the board. Thats is doubling of one’s risk not reducing(hedging). | |
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Down .15 corn and .50 beans
