Remembering the Risk Management Basics

Heather Moffatt, Grain Risk Management Advisor, Agricultural Marketing First

Spring is upon us, yet again. Spring planting is always an interesting time in the grain-marketing business. In many years, seasonal tendencies have presented us with some of our best marketing opportunities. Will this be another such year? Going into the growing
season with a tight corn balance sheet puts a lot of emphasis on Mother Nature. Weather forecasts and planting progress will be closely scrutinized as planting progresses. Despite any scares we well know that crops seem to get planted faster every year. Many “scares” experienced during the planting and growing season sometimes become unsubstantiated and an adequate crop is harvested. These are good but challenging times for producers. Excellent prices can present themselves but because it is so early in the growing season, personal production unknowns can deter aggressive price protection.

Remember these basic rules as you proceed through spring to keep you on track with your marketing:

1. Don’t place too much weight on limited data.

2. Concentrate on securing PRICE, hence your net revenue per acre.

3. Understand the tools necessary to protect price.

4. Remember, when it comes to price, you can’t lose something you never had.

5. You will never be able to accurately predict the future.

6. Assess fundamental and technical indicators.

7. You’re only going to be right some of the time.

8. Build confidence and aggressiveness – kick emotion to the curb.

9. Do what is prudent and manage price risk.

10. Success is reaching your objectives.

Grain prices have rallied and are trading in the top 10% of their historical trading range. Many argue that commodity prices have only kept up with increased production costs. That being, said it’s even more important to ensure prices are secured for the upcoming harvest and possibly future harvests. Even in a bullish environment, prices go up and they go down. Watch for opportunities this growing season and be proactive.