| Major grain merchandiser does away with HTAs
DTN Markets Blogger Pat Hill reports Thursday that the Andersons will no longer write hedge-to-arrive contracts for grain for delivery after August of 2008.
Hedge-to-arrive contracts are forward contracts that don't set the basis until a later date. When basis is wide, that's often a good deal for ag producers. But given the increasingly speculative nature of futures markets, it's become harder and harder for grain merchandisers to hedge that basis risk.
According to the DTN story, there aren't any other major grain firms that have sworn off on hedge-to-arrive contracts yet. But some have reportedly increased fees for those contracts.
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