The Groom News (Groom, Tex.), Vol. 55, No. 1, Ed. 1 Thursday, March 20, 1980 Page: 8 of 12
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How Grain Futures Can Work for Farmers
1979
1978
of Trade.
the farmer to stay solidly in
4)
\ 1977
problem in understanding is margin commitments.
futures markets are only for market are required to put up
9»
Firestone Tires
I
and Accessories
2**
Groom, Texas
Phone 248-3801
1622
?38
242
1 .
Service
Phone 248-2711
GTE
$8.50
8.00
6.50-
6.00 .
7.50
7.00
A. J. Newsom
Water Well
Submersible Pumps
Aeromotor Windmills
Page 8-The Groom News-March 20, 1980
Futures and Farmers
g <
Wash & Lubrication Service
Truck, Tractor, Automobile Batteries
of the people General Telephone is
talking about when they say We
keep you talking'.''
We will appreciate your trade!
Hop's Texaco Service Station
D.A. (Hap) Watson, owner
Oils-Grease-Diesel
(Wholesale)
282,:33
THIS IS ONE BREAK
OUR CUSTOMERS DON’T DESERVE.
When a storm knocks down a line it can put aed
James ft. Sartor,
Lineman,
Plano, Texas
One of the
100,000 GTE
professionals who
are working to
bring you better
and more efficient
telephone service
thousands of people out of contact with the world.
That’s where I come in...twenty-four hours a day. As
I tell my friends. When a line comes down, they get
me up. But I don't mind it. It makes me feel I'm an
important part of providing the best telephone
service possible.That's why I'm proud to be one
s i
adde d
A National
dm Farmers Union
Insurance Companies
DALE WRIGHT
5108 S. Western Home: 153-1660
Amarillo, Texas 79109 Office: 352-5352
ket looks more complicated lative reasons. The banker, 5.50-
“That may be because, at a hedging pattern and to
first glance, the futures mar- avoid market moves for specu-
Nov. Soybean Futures Prices
monthly highs jan.—nov.
8568528558*%
&
j
than stocks and bonds,” on his part, will stand behind
Young says. “But the real the corn producer for all
Carson County Homemakers
To Host District I Meeting
Plans for the District I ing. Instructions for making
meeting of the Texas Exten- one’s own name tags will be
sion Homemaker’s Associa- sent out by the extension
tion to be held in the Parish office.
Hall in White Deer on April A letter from West Texas
15 were set at a recent State University was read
meeting of the County Coun- asking for nominees of out-
cil. Delegates to this meeting standing women leaders to
include Delfina Vigil, be recognized on campus on
Theresa Leven and Rose April 19. Council decided
Reining while alternates will that each club make its own
Before
You
Climb
OnA $
Tractor.
BTOSSq 4
Plan your total insurance
program and arrange for
your Crop-Hail insurance.
The premium is the same
today as the day before
harvest.
CROP-HAIL INSURANCE
for corn feed — a major ex-
pense — in advance of when
he’ll need it,” Young adds.
“Again, through hedging,
a farmer has found protec-
tion in the futures market
from some of the built-in
risks of his business.”
For more information on
hedging and the futures
market, write to: Chicago
Board of Trade, Dept. FSI,
141 West Jackson Blvd.,
Chicago, Ill. 60604.
keep about even with his
marketing goal. ”
that many farmers assume the (All who use the futures
Most farmers probably hedging program with a good
understand the stock market broker and a good banker
better than they do the grain who both want him to stick
futures market, says Ronald with his hedge.”
F. Young, a director and In other words, one of the
member of the Chicago Board broker’s jobs is to counsel
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--------------------------—-------------- i be Nita Ramming and Paula selection.
M J •A .S °N Cornett. Tickets for the Kathy Gist, agent, sug-
icago oa o rade luncheon were set at $4.25. gested clubs up-date their by
..... ... - ■ - This graph tracks futures prices of soybeans for delivery in laws and reminded members
’’■ActudlyX ‘main reason ZSng rronratoumane timefarmers.have traditionally marketed their Dena Lambert volunteered to that no discrimination maybe
futures markets exist is to 10 percent of a futures con- crops. In two of the last three years, the highest prices for be responsible for cutting the allowed m them. She asked
give farmers and other people tract’s value. If market prices Moember beans occurred well before the harvest. This indicates table favor magnets and for names and address of
in high-risk businesses a chance move against the corn hedger’s that farmers who use forward pricing often have a distinct getting them to the different new members as soon as
to avoid risk through hedging.” position, he most likely will marketing advantage.__ clubs for painting. Each club possible and reminded those
Young draws a sharp dis- be required to deposit addi- actual commodity prices,” lower prices at the elevator. will be responsible for sixty present that vice presidents
tinction between hedgers, tional margin funds.) . Young says. , , What if prices had gone favors as well as three door are automatic yearbook com-
those who seek to lock in Lets say its planting The farmer plants his corn; the other way? Perhaps, for prizes to be given during the mittee members Yearbook
favorable future prices for time and our corn farmer spring and summer rainfall example, drought hits another ? 2 / J g memoers. Yearbook
commodities they wish to determines that if he makes is good. In the fall, our hedger part of the corn belt and the district meeting. prices were set at $1.55 to
sell or buy, and speculators, $2.95 a bushel on his corn is one of thousands of futures price of corn at harvest Mrs. Lansin Osborne, defray cost of typing and
those who have the risk next fall,, he will cover American corn farmers who time went up 20 cents. Then, TEHA chairman, asked for printing.
capital to try to profit from his costs and have a good harvests bumper crops. The to get out of his futures com- card tables to be used for Next Council meeting will
the ups and downs in com- profit margin,” Young says. local elevator operator is mitment after the harvest, displays on day of the meet- be April 21.
modity prices, j , The farmer notes that paying $2.75 a bushel for the farmer would have to pay
Hedgers and speculators the futures price is $3.05 a corn, 20 cents under the an additional 20 cents a
need each other in the market, bushel for corn calling for farmer’s goal of $2.95. How- bushel. Shouldn’t he get out
But for farmers to really delivery next December. So, ever, the December corn of his futures position as soon
benefit from the futures he sells December corn futures price is now $2.85 a as he sees prices going up’
market they need to stick futures at that price. bushel. “No, that would really be
to hedging, zoung says. The farmer actually plans The farmer sells his cash speculating,” Young says,
hen I hear about farmers to sell the corn to a local corn to the local elevator, rath- “The farmer is in the futures
who ve been burned in the elevator, and he knows that er than delivering it as called market to protect a realistic
futures market, I have to cash corn prices in late for in his futures contract. He price for his grain. To get
wonder if they crossed the November in his area tend gets out of his futures position full protection from the
line into speculating to run about 10 cents a simultaneously, simply by market, he should stick with
Young illustrates how bushel under the Chicago buying back the same number his hedge as long as he holds
hedging works with an futures prices. of corn contracts he sold at the cash grain
example of a corn producer “The difference between planting time,
using futures. local cash prices and the price What has this accomplished? a. ,
“First of all, the corn on the futures market is called The corn farmer has made a + Besides, cash prices tend
farmer has studied the market the basis. Many hedgers study profit of 20 cents a bushel in tp.1o loWfuturespricesand
and his local marketing con- variations in the basis more the futures market. He has if the Chicago price had gone
ditions, and has planned his closely than the changes in attained his price goal, despite a his local elevtor had gone
up by a like amount. So, he
would probably make up his
loss on futures through the
higher cash market price and
The example cited above
is called a “short” — or
selling — hedge. A hog
producer or cattle feedlot
operator might use corn
futures in another way: a
“long” (or buying) hedge.
“In this case, the hedger
would buy corn futures con-
tracts and lock in what he
considers a favorable price
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Miller, Phil & Miller, Ila. The Groom News (Groom, Tex.), Vol. 55, No. 1, Ed. 1 Thursday, March 20, 1980, newspaper, March 20, 1980; Groom, Texas. (https://texashistory.unt.edu/ark:/67531/metapth1517761/m1/8/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting Carson County Library.