Here are a few scenarios I build strategies for….
“It is now harvest time and I need to sell my grain to make bin space, but I am not happy with the price. Is there a way to sell my physical grain and still have the upside if prices go higher?”
“I’m concerned that wheat prices are going to go lower. However, I do not know how much I’m going to have yet off the combine. How can I protect myself rather than just doing a production contract?”
“My livestock (bison/cattle/hogs) are going to be sold to the US. Is there a way to control the currency fluctuation of my revenues?”
“There is a livestock insurance program through my province. I find that I’ll pay my premium every year and not use it. What alternatives do futures and options give me?”
Most growers have heard of somebody losing money in the futures market. What they don’t realize is those people were probably speculating with gold, sugar and other commodities not actually in their farming operation. This is not hedging…it is speculating.
When a farm client only wants to hedge I build tailored strategies for only the commodities that are in their operation. I’ll never recommend a hedge strategy for a commodity that isn’t in a client’s operation. In fact, I am not able to because of a Hedge Agreement filled out at the time of opening the account.