Agricultural Hedging Tool

Visualize how Futures create the "Perfect Hedge" (Horizontal Line) by offsetting Physical Risk.

Configuration

1. Market Role

Producer (Selling Crop)

Consumer (Buying Crop)

2. Commodity

Volume

Budget Price

3. Hedging Strategy

Payoff Profile

P/L relative to Budget

Unhedged (Physical) Your risk in the field

Financial Hedge The Futures Payout

NET POSITION Physical + Financial

Futures Hedge (The "X")

This strategy creates an "X" on the chart. Your physical risk (diagonal line) is perfectly intersected by the futures payout (opposite diagonal). When you add them together, you get a horizontal line, meaning your price is locked regardless of market movement.

Options & Collars

These strategies don't create a flat horizontal line across the whole chart. Instead, they create "floors" (to stop losses) while still allowing the line to angle upwards if the market moves in your favor.