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Luseland, SK | In theory, buying a put option on Winnipeg would be a good way to hedge a price for feed barley. In reality it is not such a good practice because the WCE has some major liquidity issues on its options contracts. This link should take you to options trading volumes on the WCE for the last 10 years or so, just copy and paste. This might make it difficult to purchase and option.
http://www.wce.ca/WebContent.aspx?Web_Content_Id=324
As you suggested it might be a better practice to use the CBOT corn contract as a cross-hedge for your barley production. Of course you would still need to take into account the basis and the option premium when calculating your final price. Good luck and please let us know what you end up doing. | |
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Lock in 07 fd barley?
