How the farmer would use this information in a forecast

Reference no: EM131291001

On July 10 a farmer observes that the spot price of corn is $2.735 per bushel and the September futures price is $2.76. The farmer would like a prediction of the spot price in September but believes the market is dominated by hedgers holding long positions in corn. Explain how the farmer would use this information in a forecast of the future price of corn

Reference no: EM131291001

Questions Cloud

Compare and contrast three types of futures trading costs : What is the objective of an industry self-regulatory organization? Compare and contrast three types of futures trading costs ? Compare and contrast cash settlement with physical settlement ? Identify the typical characteristics of a forward market..

How do we interpret the cost of carry in a contango market : How do we interpret the cost of carry in a contango market? What is a backwardation market? How do we explain the cost of carry in a backwardation market?

Explain what the convenience yield is : If futures prices are less than spot prices, the explanation usually given is the convenience yield. Explain what the convenience yield is. Then identify certain assets on which convenience yields are more likely to exist and other assets on which..

Describe the process of data validation : Briefly describe the process of data validation. Specifically discuss the issues of fraud, screening, procedure, completeness, and courtesy.

How the farmer would use this information in a forecast : The farmer would like a prediction of the spot price in September but believes the market is dominated by hedgers holding long positions in corn. Explain how the farmer would use this information in a forecast of the future price of corn

Explain the cost of carry model for pricing futures : Construct an arbitrage example involving an asset that can be sold short, and use it to explain the cost of carry model for pricing futures.

Benefits and limitations of comparative scale measurements : Which is a better scale measurement technique for collecting attitudinal data on salesforce performance of people who sell commercial laser printers? Why?

Management and employees-manage stress : How you would suggest management and employees should manage stress in the workplace as a result of conflict, change and other working conditions.

What is the forward contract worth at this time : Explain why this is the correct value of the forward contract in six months even though the contract does not have a liquid market like a futures contract.

User Account

All Pages