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South Central Iowa | Ehhh.... I think it so kind of a weak and tangential connection to a sunk cost. A sunk cost is already accrued and accounted for and needs to be cut off so as not to become more damaging. In this case, your year out hedge is presumably a profitable position for you. So it is not the negative that a sunk cost typically is. Growing the crop will earn you profits in spite of possibly greener pastures elsewhere. What's more, if you closed the hedge and accepted a loss and planted different crop without immediately opening a hedge on the day you closed out of the other, you would be speculating on the other crop's physical side now. That would risk the very reason you left your profitable hedge (even though underwater) and made it into a sunk cost. | |
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If you hedged next years crop, should that make an impact on what you actually grow?
