Taulark1 wrote:
egmat , in this sentence could you please help me understand the meaning conveyed by the prepositional phrase, 'with...reserves so low ..' w.r.t to the following clause ?
I don't understand how the brokers can be interested in something with the reserves ...
does it mean that the prep. phrase means to say that with this situation , the brokers are interested in something..
Your reply would be greatly appreciated!
Hey
Taulark1Happy to help.
This question touches on our understanding of the financial instrument called "futures". Futures are a type of
derivative contract agreement
to buy or sell a specific commodity asset or security at a set future date for a set price. Futures contracts, or simply "futures," are traded on futures exchanges like the CME Group and
require a brokerage account that's approved to trade futures.
Business owners generally use futures contracts to
hedge risk. For example, a corn farmer can use a futures contract to lock in a certain price for their corn months ahead of time. An airline can use futures to hedge against the risk of rising fuel prices.
Now, that we understand what 'futures' are, don't you think a broker trading in futures for food grains and a person buying such futures would be interested in upcoming weather conditions? They would right?
Moving forward, the sentence is trying to convey that the current situation is bleak. The reserves are low. And if there's a poor harvest, there could be severe scarcity of food grain, which would lead to very high prices. So, a broker trading in futures for corn, wheat, soybean, etc. (which means a broker dealing in contracts to buy the corn/wheat/soybean at a set price in future) and a person buying such futures will certainly be interested in upcoming weather conditions, because that would decide whether the harvest/yield would be high or low, and that would help decide the price of the futures contracts they agree upon.
I hope this helps improve your understanding.
Happy Learning!
Abhishek