How Does the Concept of a Short Hedge Apply to Traditional Commodity Producers?

The concept is identical to crypto mining: traditional commodity producers, such as farmers or oil companies, use a short hedge to lock in a selling price for their future production. A farmer may sell a wheat futures contract today to ensure a profitable price for the crop they will harvest in six months.

This stabilizes their revenue and protects them from adverse price movements before the physical commodity is ready to be sold.