Hello,
I’m trying to better understand how commodity producers, for instance, let’s say for soybean farmers, sell their products to large buyers like China. I know futures and forward markets (for example, the CME) are often used in these transactions, but I’m a bit confused about how this works in actual life.
Do individual farmers typically participate directly in these complex financial markets and handle hedging themselves, or do they usually sell their crops to intermediary trading companies like sysco, Phillip brothers etc? that manage the logistics, financing, and risk management on their behalf?
Alternatively, are there government agencies that play a role in buying from or selling to farmers in such international commodity trades? I was reading about 1973 Soviet Union wheat trade and in Soviet side, it was the government that was buying wheat trade and for the U.S side, it was private companies that was selling wheat? I could be wrong. I am just trying to understand
like is it farmers > intermediary companies > other side intermediary companies > other side farmers. Is that how it work? I am just confused on the whole process.
How would commodities trading work?
byu/Beginning_Coffee_993 inAskEconomics
Posted by Beginning_Coffee_993