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Water usage combined with weather information likely gives competitive advantage is futures markets.
by mentat 7y ago
Water usage combined with weather information likely gives competitive advantage is futures markets.
- jedberg 7y agoI'm sure it could but why would the farmers care about the futures market, unless they are using futures to hedge against their own crops?
- gumby 7y agoThat's exactly what the commodity futures markets are for. There's a reason why the big commodity trading floor was in Chicago (it's essentially all electronic now of course).
- jedberg 7y agoBut wouldn't they want the futures market to have perfect information? So that the futures could be priced exactly right, which would mean the lowest possible price that counterbalances a down market perfectly? I assume the farmers aren't trying to make money from the futures, they're just trying to not lose money. Their profits come from actually growing food. The futures are just there in case something bad happens. Right?
- lordCarbonFiber 7y agoI'd venture farmers make half or more more of their money on futures markets. Argi-business is a global market and optimal prices for your commodities don't necessarily conform to your local conditions/crops/etc. I can't speak for all farmers, but my family owns a farm and the futures market is huge in it generating money. You can use the futures markets to hedge against bad crop yields, lock in profits for accounting and cash flow purposes, inform what crops you are going to grow. It's immensely valuable.
- nootka 7y agoDo you know of any good articles on this. I.E. futures for the small family-run farm?
- lordCarbonFiber 7y agoThere's magazines like this one (https://www.agweb.com/farmjournal); https://www.agweb.com/farmjournal); however it sounds like we'd have different ideas of small though. Outside of direct to consumer farmers market type opperations, "small" farms in the US are still measured in thousands of acres (just, 4 figures instead of 6). The meta markets in how and when you sell crops (pre sale on the futures market vs sale at harvest, vs store and wait for commodities prices to be ideal) is, honestly fascinating and so different from the image of the "farmer" in popular culture.
- nootka 7y agoThat's still useful, thanks!