Sunday, August 14, 2011

Why isn't there a flax futures market?

Linen is made from flax and it it hitting all time price highs. It has fluctuated with fashion demand. Most of the linen (2/3rds) originates in Northern France and the Netherlands. It seems like it would be a natural for a small futures or forward market. Like most markets, it is unlikely to be successful. There has to be a competitive market of buyers and sellers. The sellers have to have risks which they cannot contract away through direct forward contracts. It is unclear that flax will make the grade, but it is worth a discussion.

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