Cocoa inventories leading up to harvest of the new crop

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Reference no: EM133629721

Question

If you were a speculator and believed you were one of the first people to become aware of this information, how would you respond? Your options, as a speculator, are to either buy or sell cocoa futures. Note that, as a speculator, your goal is to either buy low, sell high, or sell high, then buy low. Either way, you end up with absolutely no cocoa. You are only trying to benefit from the anticipated price change. As more people became aware of this information, what happens to the futures price (note: this is 'futures price,' not 'future price.') for cocoa? How does that affect today's price of cocoa? What happens to cocoa inventories leading up to the harvest of the new crop? What if the rumor was wrong and the cocoa crop is smaller than expected?

Reference no: EM133629721

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