WHO USES THE KCBT?
Commercial interests – those who buy, sell, or mill wheat – dominate KCBT hard red winter wheat trading. They use the contracts to lessen the risk of adverse price moves against wheat they buy or sell in the cash market. This process is called “hedging.” However, some traders at the KCBT neither own nor plan to take delivery of wheat. Their sole purpose is to accept price risk, hoping to make a profit. These traders are called “speculators.” Speculators are crucial to any market because they inject capital and assure that hedgers have someone to trade with. In the Value Line pit, the same types of traders are found. They include hedgers trying to lay off risk as well as speculators who want to capitalize on market moves.
