Quote:
Originally Posted by PA32R
If there are people who need or want to hedge (protect themselves from falling or rising prices) there must be those who want to speculate. They cannot exist without one another.
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There need not be speculation for this transaction to occur. Both parties can both be looking to protect their interests with long term contracts. An early payment for the seller can finance his operations, avoiding banks. The buyer is protected as his supply can not bought out from underneath him. Both parties can benefit from price stability as well.