As opposed to a farmer, a miller (processor of wheat) is likely to go __________ in the futures market.

Question

Quizplus · Accepted Answer

The miller is afraid the price of wheat might go up and ultimately cut into his profit margin when he takes actual delivery of his product. He can hedge his position by buying futures contracts in wheat. If the actual price of wheat does go up, the extra cost of producing his product will be offset by the profits he makes on his futures contracts.

As Opposed to a Farmer, a Miller (Processor of Wheat)