How Do You Understand Corn & Soybean Futures?
Corn and soybean futures are estimates of the value of commodity crops that have not yet been harvested. The practice of selling crops before they are grown and harvested originated in the mid-1800s in Chicago, when farmers and buyers who met to arrange prices and sales terms for agricultural crops began developing sales arrangements and pricing agreements on upcoming crop yields. This practice offered security to both parties because the buyer was assured of future inventory and the seller had a guarantee of a future sale. But it involved a degree of risk for both parties because future prices could vary if the harvest was better or worse than expected. Because of this unpredictability, investors began speculating on crop futures, buying and selling notes. Examine a chart detailing price fluctuations in corn and soybean prices for the past few months. The daily price varies according to weather and other variables that affect the price of corn and soybeans, such as weather patterns th
