Corn Hedge Update
Corn on the May futures have increased 35 cents approximately since the end of January.
Some factors that have influenced this rally are:
1. China has boosted corn processing capacity, which is bullish for corn demand because more will move to ethanol production.
2. Concerns above Brazil and Argentina's crop conditions may help increase old crop demand.
3. Fund money continues to buy because US ending stocks on March 8th's USDA report came in less than expected.
I’ve been discussing various strategies with clients on how to protect if this corn rally continues.
As of mid March here, you can buy a call option to protect until December at $4.10 for approximately 28 cents, or $1,400 for a 5,000 bushel contract.
Using futures contracts is another way if they are suitable for your operation.
With futures you don’t pay a premium upfront, but require to have a certain amount of margin in your account.
Contact me for a specific example for your operation.
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