Commodity Basics
Corn, Soybeans, and wheat are examples of what type of products
What are commodities
A futures contract is an agreement to buy or sell what at a future date
What is a specific quantity of a commodity
A drought in the midwest would most likely do what to corn prices?
What is increase them
Cash price= Futures price + _______
What is the basis
This type of risk comes from unpredictable weather
What is production risk
The Chicago Board of Trade is an example of what?
What is a commodity exchange
True or false: futures contracts are usually delivered on by farmers
What is false
The value of the U.S. dollar can impact commodity exports. If the dollar strengthens, exports usually _____
What is decrease
This type of contract guarantees a minimum price but allows some upside potential
What is an options contract
What's the main risk marketing strategies try to manage
What is price risk
The U.S. is the largest exporter of this oilseed crop
What is soybeans
This is the amount of money you must deposit to open a futures position
What is margin
This federal report, released montly, gives crop supply and demand estimates
What is the WASDE report
What is a put option
What is diversification
What is cash or spot price?
Hedging is a strategy used to do what?
What is reduce risk of price changes
Name one international factor that can influence U.S. soybean prices
What is demand from China/South America
A farmer selling grain directly to an ethanol plant is an example of what type of market
This marketing strategy involves selling portions of a crop at different times
Name the two main classes of cattle marketed in futures trading
What are feeder and live cattle
When prices in the futures market are higher than the local cash market, this difference is called the _____.
If grain supplies are high and demand is low, what type of market forms
What is a bear market
A forward contract locks in what
What is a price for a future sale
The balance between potential reward and risk is often called the _____ trade-off
What is the risk-reward trade-off