The Futures Market Explained
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Farmers use various tools to control the many agricultural risks. Watching the weather influences when they plant or harvest. Purchasing crop insurance and selecting farm bill safety net programs helps protect them from crop devastation. But they can also manage some of the threat posed by market price volatility by participating in the futures market. Farmers can get an idea of how this works if they play Commodity Classic, an online educational tool that uses fictitious bushels of grain on a fake futures market.
But at Harvest Public Media, we wanted to better understand how the futures market helps both producers and users of a major commodity, like corn. And how the benefits trickle down to regular food consumers. Here's what we learned.
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