| JC STONE - 8/6/2025 12:42
If you believe NEIAAG that corn could go to the lower 3's what are you going to do to mitigate risk. Will you hedge here below cost of production,buy puts , just sell at harvest?
Hi JC,
Since you referenced me, I will stick my nose in where it doesn't belong again. I am not an adviser, I don't know everyones financial needs, wants and desires so do not take this as gospel. You need to do what you need to do for your operation and not listen to anyone on the internet. With that said, I would probably recommend either doing puts or nothing. Why? First I think once the low is found - where ever it is, price will snap back pretty quickly and if it's significantly lower, we will likely return to this level fairly quickly. If I am wrong and we go horizontal at a higher level and expend the energy that way, then you wasted needed money. So if you were truly hedging - you mitigated risk but in the end cost yourself money - assuming you can hold the physical for a while. Secondly, the last time Trump was in office he came out with MFP. While it benefitted many, those that mitigated risk using forward contracting or HTA's, were not eligible for that program. Futures and options used as risk management tools were also supposed to remove you from eligibility...but it was a gray area and most people double dipped. I remember it well because we were heavily sold with HTA's and left 6 figures laying on the table. So with that in mind, there is no way that I would do an HTA or forward contracting here. Third, the new crop basis at least here leaves alot to be desired. I think they all got together and know that theres a big crop coming and storage is gonna get full and they have all intentions of getting it bought as cheap as they can. So a basis contract now here at least is not inviting for that reason and I would expect as Maizeing always said..."Basis follows spreads and the futures will follow". I think basis should start to strengthen as we near the lows and the forced selling starts drying up. That said, if I remember correctly, a basis contract was eligible for MFP, but the levels aren't very attractive right now here anyway.
Just my two cents worth.
Good luck and take care |
If you believe
