Kansas City Board of Trade :: essays papers

Kansas City Board of Trade The Kansas City Board of Trade is where buyers and sellers have the opportunity to trade commodities, this is commonly known as a Commodity Exchange. The Kansas City Board of Trade deals primarily with wheat but also deals with such commodities as natural gas. Many traders participate in what is known as hedging. Hedging is a process where traders can lock in a purchase or a sell price for the commodities in advance. The process is helps reduce the risks resulting from volatile pricing, The prices of the contracts are determined by supply and demand. The exchange provides a place where sellers try to optimize profits and buyers try to optimize utility(which will probably be profits for a finished good instead of the raw material). As a result of this the exchange does not set prices but instead gives a place for price negotiations. As a result of supply and demand; if there is more buyers than sellers the price of a commodity goes up. The opposite is also true if there are more sellers than buyers the price of the commodity goes down. The Kansas City Board of Trade affects everybody in an economic part of their life. Wheat, as the primary commodity, is used on almost every dinner table for almost every night, If the price of wheat goes up then the price to purchase the finished product also goes up. This will affect the purchasers' ability to rationalize and choose substitutes and replacements for the products. If the price of the commodity goes down, the result is the finished good is also cheaper to purchase. Families will then attempt to incorporate more bread and such into their diets possibly affecting demand for other products. The Kansas City Board of Trade is beneficial to the economy because it gives a starting point for price in the economy, My visit to the Kansas City Board of Trade proved very interesting. Although I personally saw no order of any kind to the chaos below, people ensured me there was a code.