Should I Buy or Sell Corn? From the business perspective, I should sell the corn in December as I can sell them at the current higher price and make a profit. It is good to see commodities when the rate is high and better to buy them when the price goes low to maximize profit. If I have any customers in the contract that I supply corn for next year, I should wait until the massive crop production next year, buy the goods at a lower price and provide them. For example, I hold 1000 lbs. of corn which I bought at $ 2 per pounds. So, my costs of goods sold = 1000* $2 = $2000 The current market price until December is $3 per lbs. So, if I sell the corn until December, selling price = 1000*3 = $3,000 This way I can make a profit of $1000 and use that money for something else. Holding capital for a long time and making nothing is not a good idea. If I have a customer that need 1000 lbs. of corn next May, I can buy the corn at much lower costs and sell them for profit. Price of December Corn Futures Consumers listen …show more content…
At the same time, demand will be higher than the previous year because the corn price is low. That means people will buy more corn and hold it for future. The consumption in June will be high as well. Can Speculators Carry a Bumper Crop Backward? The speculators are people whose job is to trade futures to make money. Those are people who buy and sell futures contracts buy they never use the commodities for itself. I think they can carry a bumper crop and leads to scarcity because they will buy and hold more and more when they identify that the market will go crazy after commodity. They are people who bet on price moves. They can create inferior products in the market, hold commodities and sale at higher prices in the future. The speculators could influence the cost of the merchandise. They can create rumors and bets that make supplier sell their products. When Will Profit