Backpricing

A bit of a misnomer. The term refers to buying a commodity or futures contract, but pricing it later. "That makes no sense," you say. Yeah, but it does in the agricultural world. A farmer wants to buy some feed corn (beans, wheat, sorghum) but doesn't need it on hand until the current stash is gone. No room for more feed corn, but it is known that more feed corn will be needed by October. A contract to buy is made today (August 1, for example) for delivery at a future date (September 30) and the contract will be priced at that future date.