Long refers to the position created by purchasing a futures contract, or owning a cash commodity. Long Hedge is the purchase of a futures contract to reduce the risk of a price increase. A long hedge is used to protect against rising input prices, such as corn for a livestock feeding operation. Offset is the liquidation of a futures contract position. Open Interest is the total number of futures contracts for a commodity that have not yet been offset or fulfilled by delivery of the commodity.
Position is an open commitment in a market, long or short.
Settlement Price is the daily price at which the Clearing House settles a trade. Settlement prices are used to determine account values, margin calls, and invoice prices for deliveries. It is also called the clearing price. Short refers to selling a futures contract or the need to purchase a cash commodity. Short Hedge is the sale of a futures contract to protect against the risk of a decrease in the price of the physical commodity to be sold in the cash market at a later date.