I am not a farmer nor am I in the corn belt. Don't know what goes on between the grower, the elevator, and the feed buyer or exporter. I am guessing that any of the parties can lock in a future price directly with any of the others. The opposite party can offset his risk by going to the Chicago Mercantile Exchange through a broker.
Here in the Northeast during the summer, home owners can lock in their next season's heating oil costs directly with their fuel dealer. He, in turn, will offset any distributor fuel hikes through the New York Mercantile Exchange.
There is a fourth party here and that is the Govt. They provide crop guarantees and/or corp insurance. Many crop losses are reimbursable. I am guessing the Govt will be writing many checks to farmers located along the Mississippi and many of its tributaries. Your county Ag agent should be able to offer specific advice to you regarding your crop.
One should also understand that much of the action, or "open interest" on the commodity exchanges is from parties who will never deliver or receive product. This action comes from speculators placing "educated" bets. The turnover in paper contracts (called derivatives) only produces "price discovery" but that is an important part of any market.
Other derivatives are called "options" on futures contracts. Deposits are not necessary for "puts" and "calls". Dealer only takes a commission. You can buy or sell either a put or call for a total of four ways to do business. Actually there are many more ways when you get into spreads and straddles between delivery months, strike prices, and two different commodities. Many trades only last seconds or minutes and are put on to "scalp" a few dollars per contract. The strategies are endless and are frequently done automatically with a computer program.
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Today's Featured Article - Uncle Cecil's Super A Lives Again - by Mike Purcell. A week or so out of most of my childhood summers was often spent with my Uncle Cecil and Aunt Sissie in the small East Texas town of Maydelle on their 80 acre farm. Some of my fondest memories of these visits are those of learning to drive a tractor at the helm of Uncle Cecil’s 1948 Farmall Super A. Uncle Cecil was the second owner of this wonderful little tractor, but it was almost as though he had adopted an infant. The original owner was a man from Minnesota who bought her from a local dea
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