Futures Example

Grain Market Technical Analysis

Following our May 5th publication, where I shared How Commodity Hedging Works, published by The Commodity Report, I received a message requesting an example using real dollars.

This report intends to familiarize the reader with the use of the Futures to benefit from a price increase after they have sold inventory and are now in a short position.

DO NOT attempt to replicate this example and consult with your advisor before entering any positions.

There is a high probability that this trade will not be profitable.

You can use the link below to read that report.

How Commodity Hedging Works

Following today’s KC Hard Red Winter Wheat Report, I entered into two Long Futures positions using the CME Practice Simulator to demonstrate the associated cash requirements, not including brokerage fees.

I chose to use Futures for this demonstration.

The CME Practice Simulator is a great resource to practice before risking real money.

Here is the link to the referenced earlier report:

KC Hard Red Winter Wheat

The example can apply to the following:

1. The producer sold Hard Red Winter or CPSR Wheat and is now short but does not want to miss out on future price increases.

2. Speculators who anticipate an increase in price.