The contracts help farmers manage price risk. The contracts are profitable when corn prices fall after harvest because grain merchants have guaranteed a minimum price. Delivery dates are usually not stipulated. Farmers thought they could routinely roll contracts over from year to year if prices rose and they didn't want to sell at the hedged contract price. With high corn prices during the summer, farmers were reluctant to deliver crops at the lower prices set in contracts.
Elevators assume the futures risk.
They also take on responsibility for margin calls to maintain balances in Chicago Board of Trade accounts. On Oct. 15, elevators moved to remand all the cases back to state court because they didn't seek federal relief or present federal questions. In October Bennett remanded one of the cases, Farmers Co-op Elevator vs. Doden, back to state court, citing a lack of proper federal question upon which to base removal jurisdiction. Bennett concluded that all the actions must be remanded to the Iowa district courts where they were removed because they lack any basis or question for federal jurisdiction. As the court concluded in Doden, a defense such as the one asserted here, however central the federal issue it presents may be to the litigation, cannot establish federal removal jurisdiction.