# Is there a relation between total futures and the amount of production?

I have a multipart question about futures and production.

Lets take corn as an example. We add up the total 1 year futures of corn, call this weight $A$ kg. Next, we can get a reasonable estimate of how much the world corn production will be in 1 year call this $B$ kg.

(1) Is there a relation between $A$ and $B$?

(2) Can nonproducers of a good sell futures?

If yes, suppose noncorn farmers sell corn futures. Then $A$ may appear greater than $B$.

(3) Then how does the supply and demand work? i.e., will this cause the corn price to go down in 1 year? My confusion is, the supply and demand curves I have seen only assume $B$ and not $A$. Can the demand depend on $A$?

(4) When $A>B$, what happens if everybody who bought the futures want their corn?

PS: I am a newbie, so if this sounds dumb please explain that too. Thanks.

It is not a dumb question, but very confusing to me at a basic level. The Open Interest in futures (what you call A) has nothing at all to do with the total production (what you call B). The futures market is just a derivative market, where side bets are made as to what the PRICE of the crop will be. You cannot use it to infer what the PRODUCTION will be.

Of course speculators (non-producers) can both sell and buy futures.

What consumers will eat however, is physical wheat (i.e. B), not A. A is not edible. A only tells you how many people are interested in making side bets on the price of wheat (for speculative or hedging purposes). Keep in mind also that for every seller of futures there is a buyer (i.e. futures are in zero net supply, there are A futures long but also A futures short, netting out to zero).