The Zero Sum Equation

The risk premium in the futures contract is non-observable. We cannot measure it directly. That's why unlike in the case of an insurance company, we can't go out and say, yeah, we'll take your corn and we will charge you X amount of dollars for the transfer of risk. Here it's different. But nonetheless, there are going to be farmers who want to offset their exposure to their inventory. The more they want to know what these price differentials aregoing to be, the more they're going to have to hedging in the futures markets. And somebody has got to take that on right? Well, I think you'll see where I'm going with

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