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What marketing tool would be used in the futures market by someone who owns a commodity such as milk and intends to sell it sometime in the future?

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What marketing tool would be used in the futures market by someone who owns a commodity such as milk and intends to sell it sometime in the future?

(a) Basis contract

(b) Pooling contract

(c) Short Hedge

(d) Speculating buyer

The question was asked at a job interview.

The question is from Quality in division Quality parameters of Dairy Engineering

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The correct option is (c) Short Hedge

The explanation is: A short hedge is an investment strategy that is focused on mitigating a risk that has already been taken. The “short” portion of the term refers to the act of shorting security, usually a derivatives contract, which hedges against potential losses in an investment that is held long. It will enable the futures market by someone who owns a commodity such as milk and intends to sell it sometime in the future.

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