agricultural commodities-AI-Driven Agri-Data Tool

Example

A soybean farmer uses futures contracts to lock in selling prices for a future date, mitigating the risk of price drops due to market oversupply or decreased demand.

Scenario

Consider a scenario where there is an unexpected bumper crop of soybeans. Without futures contracts, farmers might be forced to sell at much lower prices due to the sudden surplus. However, by having a futures contract in place, the farmer ensures a predetermined sale price, thus avoiding financial loss.

Example

Food manufacturers purchase wheat futures to ensure they have a stable supply at a known cost, helping them manage production budget and schedule more efficiently.

Scenario

A bakery chain forecasts the need for a significant quantity of wheat flour due to a planned expansion. By engaging in futures contracts for wheat, the bakery secures a consistent supply and cost, which is crucial for planning its expansion without the risk of volatile wheat prices.

Example

Traders might buy and sell cattle futures without ever intending to take delivery of the cattle, aiming to profit from changes in the market prices.

Scenario

A trader anticipates that beef prices will increase due to an upcoming holiday demand and decides to buy cattle futures. If the prices increase as expected, the trader can sell the futures for a profit, capitalizing on the market trend without physically handling the cattle.