Do you ever feel overwhelmed by all the jargon in grain marketing? You walk into the local co-op, hear the coffee group talking about ‘new crop’ corn being down around $.04, and think to yourself…what does that mean? Every industry has jargon, but not every industry uses it outside the four walls of their company…
Category: Futures & Options
Why you shouldn’t stress if you don’t understand options
When I ask people what they want to better understand about grain marketing, they often respond, “Options. I want to understand how to use options.” Let’s dig into that a bit more. Let’s say I’m new to accounting and I’m just starting to get comfortable filing tax returns for clients. At this point, I’ve filed…
Rolling a Basis Contract: How does it work?
While we’re on a ‘roll’ with the subject of rolling contracts, đ let’s check out what happens if you roll a BASIS contract. In the case of a basis contract, you have basis set, but not futures. Thus, your cash price is not established. Understanding what happens when you roll a basis contract can be…
Are you planning to use commercial storage out of price stubbornness, or are you going to use a more strategic marketing option this harvest?
If you don’t have enough (or, perhaps, any) on farm storage, it may seem like a fairly good idea to pay for commercial storage at your local elevator. You’re simply paying a fee (typically $.03 – $.05 per bushel, per month) to use infrastructure you don’t have, in hopes that price rallies and you capture…
What does it Mean when the Funds are “Long” or “Short” in the Market?
I’m sure you’ve seen something similar to this in market news headlines: “Funds are record SHORT corn” or, “Hedge funds are now LONG soybeans — Where does the market go from here?” What does that even mean? “SHORT corn” or “LONG soybeans”??? And who are these ‘funds’? Let’s break this down using an analogy, my…
What is ‘Hedging with Futures’?
Have you ever sold a house? Even if you haven’t, imagine you’re selling your home today. The market has been good and you think you could easily get the price you’ve been targeting. That is…if you could list your house today. Unfortunately, you’re unable to list your house for 6 more months due to other…
3 Things to do…when you don’t know what to do with the Markets
Last week I stood in my house, which needed a SERIOUS deep cleaning in virtually every room, and felt as though I couldn’t move an inch. My friends were coming over the following evening, so there was an urgency behind me needing to start doing something. But instead, there I stood. Excited to host, yet…
Secrets to Reading a Bid Sheet Element #2: Futures Month (Part 2)
One thing you may have noticed about the futures price when we discussed it last week, (find the article here if you missed it!) is that with the futures price, comes a futures MONTH. The futures prices associated with those months are also different prices…but why? To help grasp difficult concepts, I find it helpful…
Secrets to Reading a Bid Sheet Element #2: Futures Price (Part 1)
What impact does the Futures price have on the Cash Price I will receive? Do you invest in the stock market? If you do, a good starting point to understanding the futures price of a commodity is to relate it to the price of a stock. Before you decide to invest in a share of…
Why didn’t you Sell Grain Today?
If youâre still learning the marketing side of the farm operation, have you ever asked your farmer this question: âWhy didnât you sell grain today?â It doesnât matter whether the market price was up or down or whether itâs corn, beans, cattle or hogs. Just ask him, âWhy didnât you sell today?â If the market…