GRAIN FUTURES 101
Buyers and sellers get together (electronically) at a centralized marketplace, such as the Chicago Board of Trade. Instead of trading actual grains—like corn, soybeans, oats or wheat—individuals and companies lock in futures contracts. Such a contract is a binding agreement to buy or sell a specific quantity of grain in the future at an agreed-upon price (usually higher than the current price, Mark Mueller says). The place of delivery is also detailed in the contract. But the contract comes with some risk to the farmers, who are obligated to pay investors a market-based premium for any quantity of grain they can’t deliver due to crop failure.