Business and Personal Finance Dictionary

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• HEDGER
  
  Hedgers in the futures market try to offset potential price changes in the spot market by buying or selling a futures contract. For example, a cereal manufacturer may want to hedge against rising wheat prices by buying a futures contract that promises delivery of September wheat at a specified price. If, in August, the crop is destroyed, and the spot price increases, the manufacturer can take delivery of the wheat at the contract price, which will probably be lower than the market price. Or the manufacturer can trade the contract for more than the purchase price and use the extra cash to offset the higher spot price of wheat.
  
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