Series 3 – The National Commodities Futures Test Hedging Strategies & Commodity Market Fundamentals Flashcards
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Which factor is MOST likely to cause a sudden increase in corn futures prices?
Answer: A major drought forecast in the US Corn Belt
A drought in the US Corn Belt would reduce corn supply, pushing prices higher due to the supply-demand imbalance.
The hedge ratio is used to determine:
Answer: How many futures contracts are needed to offset cash market exposure
The hedge ratio calculates the number of futures contracts needed to achieve the desired level of price protection relative to the cash position.
Which US government report is closely monitored by grain futures traders for supply and demand data?
Answer: USDA World Agricultural Supply and Demand Estimates (WASDE)
The WASDE report, released monthly by the USDA, provides official US and global supply and demand estimates for major crops.
A livestock producer who expects to sell cattle in three months and sells live cattle futures today is protecting against:
Answer: A decline in cattle prices before the sale
By selling cattle futures, the producer locks in a price now and is protected if cash cattle prices fall before the anticipated sale.
What is the primary purpose of the EIA Weekly Petroleum Status Report for energy futures traders?
Answer: To provide US crude oil and petroleum product inventory data
The EIA weekly report shows changes in US crude oil, gasoline, and distillate inventories, which directly influence energy futures prices.
A rolling hedge involves:
Answer: Closing a near-term futures position and opening a new position in a deferred month
Rolling a hedge means offsetting expiring futures and replacing them with contracts in a later delivery month to maintain continuous price protection.
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Sources & references
Exam facts on this page (fees, format, dates, passing scores) are checked against these official sources; the date is our last check. Editorial policy
- finra.org — Score release, test dates, test delivery, fees, exam format, passing score · verified Oct 2026
- nfa.futures.org — Eligibility, score validity · verified Oct 2026