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HTA vs basis contract vs board...
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zmracing
Posted 3/26/2015 11:04 (#4478167 - in reply to #4478090)
Subject: RE: HTA vs basis contract vs board...


west central MN

I think doing it on the board has many advantages. You can roll it to the get carry or a better basis anytime and as many times as you would like. If you get an inverted market you can roll them backwards. You have many options as to were you deliver so you can watch the basis and also the discounts at several different locations. Most of the grain buyers around me know that I am only concerned about the basis as far as when I move the corn so they will give me a call when they get a better basis. A lot of farmers only market on the cash price so the basis is typically better when we have poor cash prices. Last spring was late around us and I had a fair amount of corn hedges on the board, seeing it was on the board I was able to get out of corn hedges and roll them to beans. It worked great last spring as corn had gone down and beans were still over $12.00 when we were planting so it made my switching to beans instead of corn a very easy decision.

If you can find a bank that understand the futures market and margin calls you can set up an account were the money can transfer everyday automatically so you don't have to worry about it. If you set up a margin account and make it big enough you don't have to worry about margin calls. Make sure your banker understands them. I think having my positions on the board and seeing the margin calls has made me a better marketer. It seems like it has also forced me to buy some out of the money calls to protect some forward sales. I usually wait to buy the calls until we get into the growing season and have a weather risk. The calls are typically cheaper right after planting. You can always start slow and do a small % on the board and see how you like it.



Edited by zmracing 3/26/2015 11:05
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