Question

Which one of the following is an example of Agricultural Commodity Futures Markets studied in this course?

a. Kansas City Board of Trade (KCBOT)

b. Minneapolis Grain Exchange (MGE)

c. Tokyo Grain Exchange (TGE)

d. All of the above

A good predictor of the local cash price in a given location is the ______ contract price adjusted for a multiple year average historical basis.

a. spot

b. futures

c. local

d. market

Answer 1

1. d. All of the above.

i. KCBOT - located at Missouri, which specializes in the hard-red winter wheat contract.

ii. MGE - located at Minnesota, which prevents abuses of trade in corn, wheat and oats.

iii. TGE - located in Japan, which offered options on corn, coffee, sugar, soybeans, etc.

So, all of these can form examples of Agricultural Commodity Futures Markets.

2. b. Futures

i. Spot- where a commodity is traded at any given time in the given market place.

ii. Futures- relation to spot price till time of delivery which is precisely adjusted for a multiple year average historical basis to know the local cash price.

iii & iv. Local and Market - comes under the sub categories of the above contract prices but they don't play any separate role in defining themselves to the question mentioned.