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It’s probably a simple matter of bulk paid-up-front purchasing, similar to how Apple and Toyota were the front of the line for chips. Let’s pretend Costco need
by dangus 4y ago
It’s probably a simple matter of bulk paid-up-front purchasing, similar to how Apple and Toyota were the front of the line for chips.
Let’s pretend Costco needs 100 eggs.
Normally 500 eggs are produced, but this year only 300 were produced.
Costco has a guaranteed contract and receives their 100 eggs. Everyone else who hasn’t paid yet fights over the remaining eggs and prices rise.
Southwest Airlines was also known for fuel agreements that hedged against sudden price increases.
- dubcanada 4y agoMost people do this, this isn't unique to Costco or Southwest Airlines. That's why future contracts exist. Although it rarely guarantees a delivery, it does allow you to hedge against increases/decreases as a company. You can take a look at APU0000708111 and see how crazy it's been the past 2-3 months.
- deleted 4y ago[deleted]