date:Jan 21, 2013
simple strategy to forward price a commodity for a set price and delivery in the future. One reason that cash forward contracts are so popular is that producers do not want to deal with the basis risk and are willing to pay someone else to handle the basis issues for them. This strategy shifts the price risk from the producer to the buyer. The seller should seriously consider on how much he/she is willing to pay for shifting that risk. If one is risk averse then they would be willing to pay (giv