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What will replace distillers grains?
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thereaper
Posted 3/25/2020 18:58 (#8138483 - in reply to #8138236)
Subject: RE: Jon, there is an ethanol plant


Ol’ Wisco
They hedge it by selling or hedging their finished product not the corn itself. They may have it hedged PRE arrival/contract. They lift that hedge upon spot arrival or entrance of contract. It’s no different than a cattle feeder. If he buys corn for feed it’s “hedged” via his forward/hedge against the cattle not straight corn. If they are staying hedged without hedging the corn against the ethanol crush trade then I have no sympathy for them because that is horrible risk management and an improper way to eliminate price risk.

An elevator or middleman will have it hedged against the board. An end user will not have contracted corn hedged against corn futures.



Edited by thereaper 3/25/2020 19:01
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