Future Trading and the Cash-Grain Markets

Excerpt: It has long been recognized that futures and cash-grain markets are definitely related, but just how and why they are related has not been equally well understood. Cash and futures prices during certain periods will be found to move in close accord, but in other periods wide variations develop and without any apparent cause. When such variations occur the value of future trading is greatly weakened. This study outlines the relation of future trading to cash-grain markets. The essential features of the markets for cash grain and the markets for futures are summarized and contrasted, cash and futures prices are compared, and in the light of this comparison the principal functions of future trading are described.