Montana farmer-stockman. [volume] (Great Falls, Mont.) 1947-1993, 1955-09-15
FAIR
EXCHANGE:
by
Cedric Adams

| WE LEFT OFF. in last months column
with the wife usking me what groin III
lures ure-und with me promising tc
expl0in the whole process to her. like
this. -.
I SAYS TO HER. For exomple. the
former brings load of. well soy
wheot. into the elevator in his home
town. Muybe thot load is q thousond
/ bushels" Well. whot if it isn't q
thousand bushels?" she interiected.
Now don't go interrupting me" says.
| I'm going to have trouble enough onY-
woY without any bock-Yuk from you.
| Now. where was I? Oh. yes. q former
| had brought his wheel to the elevator
to sell it and he isn't quite satisfied
with the market price. He figures muY-
be it will go q little higher six months
from now. So the elevator. man coils
his commission house und hos them sell
thousand bushels of wheot short.
We'll. if he's got the wheut on hand,
how is he short?" my wife interrupted
ugoin. Are you going to listen TO me
while explain this or ore you going
to keep usking lot of silly questions?"
I retoTted. I'll keep STILL" she prom
ised. sThot'll be CT mirucle." soid
slYlY. as I ducked the book she had
tossed in my direction. 49,.
$50 THE ELEVATOR MAN gets the
money for the wheat he has sold
short and he gives that to the farm
err. No, that isn't quite right. Now
just be quiet while think this thing
out. The elevator man sells the
wheat long and he gives the farmer
s. now that isn't quite right either.
I'll tell you what I'll do with yOu,"
/ says to her, ssI'II have a guy at the
Grain Exchange write it all out for
you and then I'll read it to you. /
can see right now that you aren't
digging me-" s'I'm not digging y0u,"
she cracked, ssY0u know about as
much about grain futures as Marilyn
Monroe knows about hem-stitching.
Get the guy to write it out and then
you read it to me" Which did
and here it is. -
"OKAY. CEDRIC. Let's use your ex-
ample of the Turner and his thousund /
bushels Of wheut. NoturullY. if the 1
elevator man buys that wheot at to-
days price, and the price Of grain
drops before he con find buyer. he
stonds to lose on the transaction. Thot's
where groin futures come in. The elevu-
tor buying ct toddY's price con turn
around and sell Immediately OFT toduY's
price by meons of futures contract.
He hos simply ogreed to deliver at q
Future date q thousond bushels of
whe0t- ct toduY's price.
ACTUALLY, YOU'VE applied the
,he0ry of futures trading many times
IN your everyday living. When you
contract with builder for a home to
De completed at certain future date
land you both agree now ON a GER
ain price, you have entered into a
utures contract. When You borrow
money from bank, and agree TO
epay the loan by certain future
late and to pay for that loan at the
urrent rate of interest-again, you
ave made future transaction.
So you see. groin futures provide
as well as sound price
osis for buying ond selling today to
leet tomorrow's demands. Any ques-
ons?"
nd. us told my wife. there it is.
My it still Leaves it up to me to tell
OH how futures Gre used for "hedq-
g which Is whut wus driving ct
i the time. And that. my friends.
ell tuke up in next months column.
s1'e ~4A