On March 13th 1851, a farmer signed a contract promising to deliver 3,000 bushels of corn to Chicago that following June at one cent below the current cash market price. This trade is the first recorded forward contract that allowed farmers to reduce their risk and gave buyers a means to guarantee a supply of goods. The huge success of this method brings us to the present day, when every bushel of corn is traded an average of 12 times before a final customer receives it.
This increase in trade offers the market three major advantages: risk reduction against. . .