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| In my opinion HTA's generally work. It should not cost more than 5 cents initially, and not more than two or three cents to roll. Do not HTA for harvest delivery unless you are diligent enough to set the basis well in advance of delivery. At harvest basis can get tough. With grain in the bin you can usually pick up carry in the market for deffered delivery and pick up some basis improvement. You can probably do this cheaper with your own hedge account, but of course you will be stuck for any margin calls. You will not beat a cash flat price contract every time. A HTA is more flexible because you can roll it forward if you think you can improve the basis or gain more carry. With a cash contract you must deliver as specified. Also you may have a choice of delivery points with the HTA, whereas with a cash contract the delivery point is specified. If you use a HTA as is should be used chances of coming out worse than a cash contract are small. | |
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Questions about rolling HTAs at the coop to capture carry/basis
