farming’s futures
By David K. Sauder
Commodity Advisor
Trade Tech, Lancaster
This week we conclude the
alphabetical list of common terms
in the futures industry and the
definitions for these terms.
* Selling Hedge (or Short Hedge)
- Selling futures contracts to
protect against possible decreased
prices of commodities which will
be sold in the future. See also
“hedging.”
* Short - As a noun, one who has
sold futures contracts or the cash
commodity (depending upon the
market under discussion) and has
not yet offset that position. As a
verb, the action of taking a position
in which one has sold futures
contracts (or made a forward
€ contract for sale of the cash
commodity) without taking the
offsetting action.
For example, if you had no
position and you sold five con
tracts, your action would be
“shorting the futures,” and you
PL ROHRER & BRO„ INC.
would then be a “short." However,
if your previous position was one of
having bought five contracts (i.e.,
“being long five”), and you then
sold five contracts to offset that
position, your second action would
not be referred to as “shorting,"
because your position when the
second action was concluded would
be zero.
* Speculator - In an economic
sense, one who attempts to an
ticipate commodity pace changes
and to profit through the sale and
purchase or purchase and sale of
commodity futures contracts or of
the physical commodity; provides
liquidity to the market by acting as
buyer or seller to the long and
short hedger.
* Spreading - The purchase of
one futures contract and sale of
another, in the expectation that the
price relationships between the
two will change so that a sub-
sequent offsetting sale and pur
chase will yield a new profit.
Examples include the purchase
of one delivery month and the sale
of another in the same commodity
on the same exchange, or the
purchase and sale of the same
commodity on different ex
changes, or the purchase of one
commodity on different ex
changes, or the purchase of one
commodity and the sale of another
(wheat vs. corn or com vs. hogs),
or the purchase of one commodity
and the sale of the products of that
commodity (soybeans vs. soybean
oil and soybean meal).
• Ticket Tape - A continuous
paper tape transmission of com
modity or security prices, volume
and other trading and market
information, sent on private leased
wires by the exchanges, available
to their member firms and other
interested parties on a sub
scription basis.
* Variation Margin Call - A call
for additional margin deposits
made by a clearinghouse to a
clearing member while trading is
in progress when current price
trends have substantially reduced
the clearing member’s margin
deposits. Variation calls are
payable within the hour.
Send your questions about
futures trading to Farming’s
Futures, Lane. Farming
Newspaper, Box 3tt, Lititz, PA
17543.
Lancaster Fanning, Saturday, May 22,1982—011
Federal meat inspectors
get paid to clean up
WASHINGTON, D.C - Up to 15
minutes a day that inspectors in
slaughter plants spend preparing
for the job and cleaning up after
work will be counted as part of the
eight-hour inspection day
provided to meat and poultry
plants at government expense,
under a new proposal by the U S
Department of Agriculture
Up-to-now USDA contended that
changing clothes and cleaning up
were not "hours of work” and an
integral part of the inspector’s job
However, the union representing
government meat and poultry
inspectors disagreed and
presented the matter to the Office
of Personnel Management, which
upheld the union. USDA appealed
the OPM ruling to the comptroller
general, who sustained the OPM
and union position, according to
Donald L Houston, administrator
of USDA’s Food Safety and In
spection Service
The proposal provides that the
time spent preparatory and
cleanup activities up to 15
minutes per inspector per day
would be treated as any other
inspection service for the purpose
of determining hours of work and
the overtime and holiday work
costs to be reimbursed by
federally-inspected plants
Under federal regulations, five
consecutive eight hour days of
inspection per week are provided
to a plant at government expense
Any inspection service provided in
excess of these amounts is over
time, the cost of which is borne by
the plant which has requested the
additional service
A notice concerning the proposal
was published in the May 7 Federal
Register, available in many public
libraries. Comments, in duplicate,
are due by July 6 They should be
addressed to Regulations Office,
Attention Annie Johnson, Room
2637-S, USDA, Food Safety and
Inspection Service, Washington,
DC 20250