farming’s futures
By David K. Sauder
Commodity Advisor
Trade Tech, Lancaster
What is the relationship between
the cash market in the Lancaster
area and the futures market
prices?
K. Groff, Lancaster
Reference to the difference
between cash market and the
futures market price on any
specific day is called the basis.
Fortunately, the basis m the
Lancaster region usually favors
the farmers. Due to the demand of
the close large population centers
in this area, the cash market has
been consistantly higher than in
the mid-west.
1 don’t understand how futures
work. Does someone buy your
ieeder stock? 1 fatten a lot of hogs.
A. Stoltzfus, Myerstown
To understand how futures
contracts work, you need to look at
two different markets. The cash
market and the futures market.
While they usually move together,
they operate independently.
The Cash Market
You already use the cash
market.
When you have hogs ready for
market, you truck them to the local
packer, stock yards or sales
stables. You sell the hogs for
whatever price the "cash” market
happens to offer.
Of course, you have a lot of risk
when you depend entirely on the
cash market. You hope the price is
WESTEEL-RQSCQ
GRAIN BINS
Number Bushel Ft. Height
Diameter Model No. Of Tiers Capacity Eaves - Overall Cash Price
13.8 Ft 144 4 1453 10.3 14.3 *870.00
13.8 Ft. 145 5 1769 12.8 16.8 *1,014.00
13.8 Ft. 146, 6 2085 15.3 19.3 *1,173.00
19.1 Ft. 194 4 2883 10.3 15.8 *1,414.00
19.1 Ft. 195 5 3438 12.8 18.3 *1,654.001
19.1 Ft. 196 6 4093 15.3 20.8 *1,920.00
19.1 Ft. 197 7 4698 17.8 23.3 *2,135.00
19.1 Ft. 198 - 8 5302 20.3 25.8 I *2,395.00
Prices Shown Are For Cash. FOB Manheim, PA K.D.
★ Additional Drying Sizes Up To 18,000 Bushels!
★ Additional Storage Sizes Up To 250,000 Bushels!
★ Hopper Tanks Up To 20,00 p Bushels!
EBERSOLE EQUIPMEIVT
r & SUPPLY COMPANY
I|P JOHN R. EBERSOLE
RD 5, Box 190, Manheim, Pa. 17545
Phone 717-665-4201,665-6861 or 738-1305
high the day your hogs are ready.
And you hope your hogs get mto the
sales nng when the bidding is
brisk.
You’re strapped to whatever the
buyer will pay on the one day your
hogs must go to market.
The Futures Market
On the futures market, the
farmer can sell hogs in advance by
contract for delivery when they
are finished. That’s called
hedging.
Smce you are under no pressure
to accept the price on any one
specific day or week, you can
watch the futures market and sell
when the price is right. The right
selling price will vary with each
farm operation.
You need to figure your costs of
production and add a profit. When,
the price, on the futures market
reaches the level that you can
accept, sell a futures contract that
represents your hogs for sale at a
future time.
When'you sell the futures con
tract you lock m the price you will
realize when you sell your hogs on
the cash market.
Futures contracts have two
transactions to be complete. The
sell side used when you sell your
bogs in advance by contract and
the buy side used to complete the
futures contract transaction at the
time you sell your hogs on the cash
||| (For More Information, Call or Send Coupon)
Farm Museum offers craft classes
LANCASTER Craft classes
will be held at the Pennsylvania
Farm Museum during the month of
November. The registration fee is
$l2 per course. Most classes also
charge a materials fee ranging
from $3 to $l2.
Registration begins October 21.
Register at the Farm Museum
office or by mail, no registration
will be taken over the telephone.
market "and no longer need the
protection of the locked-in selling
price.
When your hogs are finished, sell
them on the cash market as usual.
Then buy back the futures contract
from the futures market.
When these two transactions
have been completed, any
movement of market prices in the
futures market or the cash market
after you sold your original futures
contract will be equalized. The
futures contract has simply acted
as an insurance contract to give
you your desired selling price.
The same principle works just as
well for cattle, wheat, corn or
soybeans. You can-lock in a future
selling price to reduce most of the
risk involved in the fluctuating
cash market.
In addition, if you are buying
corn or soybeans, you can buy
futures contracts at a favorable
price to insure good feed pr'ces for
yourself through the year. For
example, poultry producers who
had the foresight to hedge feed
needs at low corn prices netted
very sizeable profits in the past
two years even with the very low
egg prices.
Other questions about the
futures market may be sent to
Farming’s Futures, Lancaster
Farming Newspaper, 22 East Mam
St., Lititz, PA 17543.
The following courses will be
ottered at the Farm Museum:
Tinsmtthing 1: Phil Kelly, in
structor, will meet on Monday
evenings, November 2,9, IB and 23
from 7 p.m. to 9 p.m.
Applique Quilting: Dons
Riexmger, Instructor; will meet on
Monday evemngs, November 2,9,
IB and 23 from 7 p.m. to 9 p.m.
Rug Hooking: Maud Zane, in
structor, will meet on Tuesday
mornings, November 3, 10, 17 and
24 from 10 a.m. to 12 noon. • -
Woodworking: Drew Lausch,
Instructor: will meet on Tuesday
evenings, November 3, 10, 17 and
24 trom 7 p.m. to 9 p.m.
Punched Paper Embroidery;
paper needlepoint, Donna Horst,
instructor; will meet Tuesday
evenings, November 3, 17, 24 and
December 1 from 7 p.m. to 9 p.m.
Stencilling: Lou DeLano, In
structor; will meet on Wednesday
mornings, November 4, 11, 18 and
December 2 from 9 a.m. to noon.
Rug Braiding: Mae Hreneman,
Instructor; will meet on Wed
nesday mornings, October 28,
Eastern Limousin slates
FREDERICK, Md. - The
Eastern Limousin Breeders’
Association will hold their fall sale
Saturday, November 7 at 7 p.m.
The sale will be held in Frederick,
Md. at the County Fairgrounds
Sale Barn.
The sale will include 60 head of
fullbloed, American pureblood,
and percentage bulls and temales.-
Many of the females will be bred or
have calves at side. There also will
be 25 club calves in the sale.
Feed Bins
Also
★ POULTRY & HOG EQUIPMENT ★
Please Send Information On The Following;
□ Grain Bins □ Shenango Buildings
□ Feed Bins
□ Bucket Elevators
Name
Addresser Rural Route
Town.
Phone (Include Area Code)
mcaster Farming, Saturday, October 24,1981—823
fall sale Nov. 7
See
EBERSOLE'S
FOR...
[ \
Authorized Sales ~
□ Poultry Equipment
□ Hog Equipment
Stat
November 4,11 and 18 from 10 a.m,
to noon.
Molded Pottery: Phil Richards,
Instructor; will meet on Wed
nesday afternoons, November 4,
11,18 and 25 from 1 p.m. to 3 p.m.
Tatting: Gloria Edmunds, In
structor; will meet on Thursday
evenings, November 5, 12, 19 and
December 3 from 7 p.m. to 9 p.m.
Egg Scratching: Evelyn
Althouse, Instructor; will meet on
Tuesday mornings, Novembers, 10
from 8:30 a.m. until noon.
Corn Husk Braidings: Evelyn
Althouse, Instructor; will meet on
Wednesday mornings, November
5,12 from 8:30 a.m. until noon.
Wood Graining: Marge Yoder,
Instructor; will meet on November
14, from 9 a.m. until noon and 1
p.m. until 3 p.m.
Christmas Cookies of Yester
day: Mae Breneman, Instructor;
will meet on December 1,2,3 from
9 a.m. to noon.
For further information, please
call or write the Pennsylvania
Farm Museum, 2451 Kissel Hill
Road, Lancaster, PA, 17601.
A special consignment of the sale
will be the fullblood herd of
Keystone Limousin, Newville.
Over the years they have
established a herd of Keystone
Commander daughters.
For further information contact
Bob Bell, BR Cattle Co., Cookville,
MD, 301/489-7180 or Eastern
Limousin Breeders Association,
3540 Anderson Rd., Lynchburg,
OH, 513/364-2077.
Bucket Elevators
Zip.