Grain farmers know how crop yields and weather affect crop prices, but the impact of investors may be less familiar. Understanding how commodity funds move the market can be crucial for the success of small farmers, especially in today’s global economy. To help you understand how this “10-ton gorilla” affects your livelihood, the investment professionals at RG Investments are proudly hosting a workshop in Seward, NE on February 26^th. In the meantime, the below information can answer some fundamental questions about commodities. 

How Commodity Funds Move the Grain Market

What is a Commodity Fund?

Unlike other investment funds, which usually trade in shares or bonds, commodity funds buy and sell futures, which are contracts to buy a certain quantity of a product at a specified price at a pre-determined date. If the price falls before the date of the contract, the investors will lose money, but if the price goes up, they’ll make a profit.

How Do These Funds Affect the Market?

Like any other commodity, the grain market runs on supply and demand, which is typically subject to conditions like the price of other products and the average crop yield. However, speculative investors entering the equation can have a dramatic effect on those market fundamentals. If commodity funds are competing with large commercial bakers (who need to secure wheat) and other buyers, the increased demand in the futures product market will push prices up. By the same token, if investors decide not to put their money in grain futures, demand will drop off and the price will likely fall.

Want to Learn More? 

The investment professionals at RG Investments have been serving Nebraska investors and farmers for over 27 years, drawing on their extensive experience to help them achieve dreams. Their next “10-Ton Gorilla” commodities workshop will be held on February 26th at 5:30 pm at the Seward Public Library. Reserve your workshop space online or by calling (402) 643-6669. Space is limited, so don’t delay!

 RG Investments in Seward, NE, offers a wide range of services, from financial or retirement advice to insurance information. Their expert financial advisors pride themselves on understanding their customers and tailoring their services to their needs and goals. For more tips and insight, view their website or follow them on Facebook. 

Futures and options trading involves risk of loss and may not be suitable for all producers or investors.