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EC SoDak | Typically between the red lines is historically the better time to start hedging. It also helps to know where the floor and ceiling resistance lines are to guide you a bit. Generally I’ll do 10-30% in that same timeframe but the year before, then shoot to be 70-90% hedged by the end of that right side red line on the current year. Market dynamics, how my crop is looking, moisture supply, etc defines what percentage I’ll feel comfortable hedging too.
An example for Dec 24 contract that may make my above paragraph more clear.
Shooting for 10-30% hedged for Dec 24 contract but placing those hedges via spring (April/May) and summer (June) of 2023. Then in late April-June of 2024 I’ll spread out more hedges until I hit that 70-90% of expected crop. When hedging, if you price and the market goes up, you owe margin calls to the other side of the trade to make up the difference. If you price and the market goes down, then they pay you the difference. Hedging also allows you to roll the contract out to a different month and collect the market carry if you plan to store your crop. Ie today the Dec 24 spread to July 25 is 35 cents.
Edited by SoDak Farms 8/22/2024 12:43
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Corn/ Bean Bottom
