” Eventually every contract is delivered from an actual producer to an actual consumer.”
Probably very few actual producers have sold their 2008 crop forfuture delivery at the high prices we have seen. The possibility of not having a crop to sell (hail, flood, drought, etc.) is too high to risk.
It is also likely that very few actual producers have sold any of their grain at the high levels. I would guess everyone sold on the way up and very little actual grain moved.
Risk management is not the same as risk aversion. When markets get completely out of kilter there is opportunity to take calculated risks. I opted to forward contract less than half of a normal production. Even if I had been hailed out we would have had no trouble buying the grain needed for harvest time delivery against our contract well below our contracted price. If we had no production and prices were higher than our contract we would have taken a hit – some of which hopefully would have been absorbed by our crop insurance. That is why we would never forward sell over half of a normal expected production.
I would concur that very little grain was sold at the highest prices. It never is. A lot would have been sold on the way up. That which wasn’t is probably still being held waiting (hoping) for prices to go back towards the highs.