Friday, April 25, 2008

Regulators Back Away From Changes to Commodity Hedging - New York Times

Regulators Back Away From Changes to Commodity Hedging - New York Times:
"All the farm industry speakers expressed concern about whether banks, in the midst of a tight credit market, would continue to provide the farm industry with the credit it needs to meet the higher costs of maintaining their hedge positions.

The commission was told about a “very solid” grain elevator in Kansas that lined up a $15 million line of credit last fall to finance margin calls on its hedged positions and has just learned that it will actually need $80 million in credit for this season."


Given it is coming up on finals, I bet an interesting question would be to draw the payoff diagrams that the grain elevator likely has.

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