When Can We Start Breaking Things?

[gaelic cowboy]

What you say is partly true - prices are rising as there is/has been a drought in the US but the reverse is also true, the futures prices (just like normal shares or Government bonds) rise and fall on the amount of the demand from investors.

Indeed but this demand has an upper and lower level bound by the market price of the resource.

basically there is a point beyond which it makes no sense to hedge anymore, this can be driven because the potential price of the resource will eat your future profit.

That will generally mean you will try to price below tomorrows price(assuming market price growth) and will probably have to offer something above todays price.

However not everyone prices for profit sometime it's for access, for example a brewery needs barley so they offer a high price to encourage planting for a stable supply of quality barley. (although usually it's a straight contract for delivery at a set price)