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Fort Collins, CO | It is not quite as simple as that.
Generally, we try to get our clients "market-neutral" by the end of February. This time works well because it matches the spring price in crop insurance. It also works well because folks have locked-in their inputs, and made the majority of decisions regarding their planting intentions (though we have a fair amount of flexibility built-in in case this changes). There is nothing exceptional about February or the spring price; it just seems to be a time/price that works well and covers most exposure for a given growing season.
From there, we have many decisions to make about how and when to buy and sell throughout the year as the market-sensitivity of the portfolio changes. Many things can move this sensitivity around time, price, supply and demand for options, and production expectations, to name a few. As these things change, we need to make buys and sells to (hopefully) bring the portfolio closer to market-neutral. How and why we go about these decisions are, I guess, what you might call a part of the secret sauce, though if you dig deep into the Tools and Tactics part of the website, you can probably get a pretty good idea.
https://www.quartziteriskmanagement.com/tools-and-tactics
In a more general sense, if you were to ask me when I think the best time to manage risk is, I would say the moment it is acquired - anything else is speculation. I have mentioned before, and I will again, that the way we do things is not for everybody. Those that have an edge in predicting where prices are headed or those that enjoy the swings of timing the market will not like how we do things. | |
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Weekly Corn Market Update
