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| As a producer when wondering if you should reward a rally.. ask yourself this:
Would I be more mad if I sold today and the market rallied another +$0.50?
Or if I didn’t sell and the market tanked -$1.00?
Not long ago there was talk about corn with a $3.00 handle and sub $9.00 beans
I think corn specifically still has potential upside.. but it would be silly for many to not consider rewarding a +$0.70 cent rally in corn and +$1.00 rally in soybeans
Today we alerted a hedge alert/sell signal for both corn & soybeans to our subscribers.
An example of a hedge you could consider in both corn & beans is at the money February puts.
This would give you protection for the next 10 days.
Trump is going into office in a week. Already talking about tariffs. South America is in weather mode.
Grabbing a Feb put locks you in a floor in case this market gives back the rally.. while at the same time keeping your upside open in case this rally continues here short term.
For 5 cents you could grab a Feb $4.75 corn put and create a worst case scenario floor of $4.70 until January 24th.
The rally continues?
Great. Your put expires worthless but you make a good cash sale. (or then get a higher priced strike and raise your floor even higher).
The market tanks?
Your put protects you and gives you a floor.
Hedge Math:
Put Strike - Cost of Put = Floor Price
$4.75 - $0.05 = $4.70 floor
When you lift the hedge, you replace it with a cash sale is typical hedging 101.
Don’t like options or don’t have a hedge account? Many could consider small simple incremental cash sales instead.
But this is an example of why a hedge account is a great tool to have in grain marketing.
(This is not a recommendation. Options are risky and not suitable for everyone)
Here is more details on the signal in todays audio for those interested: https://txt.so/Xitf9R
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Hedge idea for corn & beans
