Knowing some basic definitions will help combat marketing anxiety. A broker is an agent who negotiates the buying and selling of contracts for commodities. You may hire a broker to buy and sell contracts, or you may enlist the services of a marketing consultant who sells advice in addition to executing your orders. The term options refers to a contract which conveys the right to buy or sell a designated commodity at a specified price during a stipulated period. Hedging means to buy or sell commodity futures as a protection against loss in the cash market.
Futures means to buy or sell a commodity for future delivery.
Another common market term is spreading sales , which means selling commodities throughout the year rather than just at harvest. Charting refers to keeping a record of the high, low, and closing prices of a commodity during a stipulated period of time. Charting is a method used by marketing specialists to project the best time to buy or sell a commodity and note underlying market trends. The difference between the cash price, or spot price, and the futures price is referred to as the basis . A bear market describes a market where large supplies or poor demand cause prices to rise, and a bull market is a market where small supplies or strong demand cause prices to rise.