SAN MATEO, Calif. (HedgeWorld.com)–Folks in Illinois with a drought-induced pessimistic outlook about corn and soybean production can now take positions based on their views via HedgeStreet Inc.
HedgeStreet now offers so-called Hedgelets on U.S. Department of Agriculture corn and soybean production forecasts. In this case, the Hedgelets are “yes” or “no” contracts based on the estimated corn and soybean production forecasts released by the USDA’s National Agricultural Statistical Service.
According to HedgeStreet officials, these reports are “carefully monitored by commodity futures traders and have a direct impact on prices.” They come out monthly from August through November and again in January.
Hedgelets are contracts that allow traders to take positions relative to some outcome. For instance, Hedgelets on corn and soybean production would let buyers say either yes, the corn/soybean production forecast number will exceed some threshold, or no, it won’t. The payout on the outcome is fixed, and traders can’t lose more than they bet.
“Corn and soybeans are highly sought-after commodities used in thousands of food items and industrial applications,” said John Nafeh, HedgeStreet’s chief executive, in a statement. “By trading these new Hedgelets, HedgeStreet members can offset risks associated with rising and/or fluctuating corn and soybean prices or speculate on the direction and degree production forecasts will change.”