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  • The Supply of Speculative Services in Wheat Corn and Soybeans

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    Cervino Institute
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    Telser, Lester G (1967). “The Supply of Speculative Services in Wheat, Corn and Soybeans” Food Research Institute Studies 7(1967, Supplement):131-176. Despite much empirical investigation, students of organized futures markets are still far from agreement on which of several rival theories of speculation and hedging more adequately explains the “facts” of futures trading. Hardy and Keynes were the first to state clearly the relevant issues. Their theories view the hedgers, who deal in the physical commodity, as the purchasers of price insurance from the speculators. The hedgers, who own inventories, bear the risk of a price decline that they transfer to the speculators by the sale of futures contracts not greater in quantity than the physical amount of their inventories. If speculators are averse to bearing risk, then they must be induced to purchase the futures contracts from the hedgers by the expectation of a positive return. Therefore, since the speculators are net long, it is necessary for the futures prices to rise to maturity on average if the speculators are to receive a positive compensation for their risk bearing.

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    Telser, Lester G (1967). “The Supply of Speculative Services in Wheat, Corn and Soybeans” Food Research Institute Studies 7(1967, Supplement):131-176. Despite much empirical investigation, students of organized futures markets are still far from agreement on which of several rival theories of speculation and hedging more adequately explains the “facts” of futures trading. Hardy and Keynes were the first to state clearly the relevant issues. Their theories view the hedgers, who deal in the physical commodity, as the purchasers of price insurance from the speculators. The hedgers, who own inventories, bear the risk of a price decline that they transfer to the speculators by the sale of futures contracts not greater in quantity than the physical amount of their inventories. If speculators are averse to bearing risk, then they must be induced to purchase the futures contracts from the hedgers by the expectation of a positive return. Therefore, since the speculators are net long, it is necessary for the futures prices to rise to maturity on average if the speculators are to receive a positive compensation for their risk bearing.

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    37 views47 pages

    The Supply of Speculative Services in Wheat Corn and Soybeans

    Uploaded by

    Cervino Institute
    Telser, Lester G (1967). “The Supply of Speculative Services in Wheat, Corn and Soybeans” Food Research Institute Studies 7(1967, Supplement):131-176. Despite much empirical investigation, students of organized futures markets are still far from agreement on which of several rival theories of speculation and hedging more adequately explains the “facts” of futures trading. Hardy and Keynes were the first to state clearly the relevant issues. Their theories view the hedgers, who deal in the physical commodity, as the purchasers of price insurance from the speculators. The hedgers, who own inventories, bear the risk of a price decline that they transfer to the speculators by the sale of futures contracts not greater in quantity than the physical amount of their inventories. If speculators are averse to bearing risk, then they must be induced to purchase the futures contracts from the hedgers by the expectation of a positive return. Therefore, since the speculators are net long, it is necessary for the futures prices to rise to maturity on average if the speculators are to receive a positive compensation for their risk bearing.

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    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
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    1967 by The Board of Trustees of the Leland Stanford Junior University

    1967 by The Board of Trustees of the Leland Stanford Junior University


    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University
    1967 by The Board of Trustees of the Leland Stanford Junior University

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