Post Harvest 2018 Grain Marketing Plan
Is your grain currently held on farm in silos?
If so, consider the following:
A straightforward strategy is to simply sell out-of-the-money call options. This technique alone will help your grain bins pay for themselves and make your farm more cost effective.
You can wait until the basis becomes favorable throughout winter, and into spring, before you decide to deliver.
Choose an option strike price above the current futures price - select a price point at which you will be comfortable in releasing the grain and delivering to the elevator of your choice.
Current Example: Sell a March 2018 $3.90 Corn Call for 10 cents or $500.
If the futures price is below the strike price of $3.90 upon option expiration, then you would simply keep the 10 cent premium, or $500 from originally selling the call. This premium can then be applied against your basis.
If the futures price is above $3.90, you can then deliver to the elevator. It’s a win/win by either collecting premium, or moving grain off farm at higher than current prices.
Continue to execute this plan, as you await a possible grain market rally. This allows you to obtain your preferred hedging price. If a subsequent rally does not develop, you will continue to collect premium as the options expire worthless. This premium can then be applied to your operation.
Our plan is customized to your farm production - whether large or small
LET US HELP YOU TAKE CONTROL OF YOUR FUTURE!
20+ Years’ in business - with prior CBOT grain pit experience
Independent futures and options strategies for agricultural price protection
Trading specialist in Corn, Soybeans, Wheat, Cattle, Hogs, etc.
- We offer personalized hedge programs geared directly to your farm’s production and size!
- Hedging will allow for alternate delivery point flexibility. Untying your production from a single grain elevator or delivery point, may elevate your basis through competitive bidding.
- Hedging may allow your grain bins to pay for themselves, through the selling of call option premium.
- Hedging allows you to “roll” futures positions forward, while storing grain to capture price spread premium.
- Hedging allows you to lock in your target pricing while sidestepping Hedge to Arrive agreements - giving your operation flexibility upon delivery.
- Hedging can often be utilized without large out-of-pocket expenditures, through the use of Bank Operating Loans.
- Hedging can allow one to re-own their grain on paper, at any time, if upcoming pricing levels are deemed positive.
- We utilize CBOT futures and options, which provide excellent liquidity and financial security.
- We have experience hedging for feedlots and chicken farms - providing UPSIDE price protection on feed purchasing needs.
BYRNE AGRICULTURAL MARKETING
CALL Jim Byrne
This material has been prepared by a sales or trading employee or agent of Byrne Investment Services, Inc. and is, or is in the nature of, a solicitation. There is a significant risk of loss when trading futures and options contracts. Please read our full disclaimer.
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