Hi This is Mark Gold with Top Third Ag Marketing
Over the last 6 months the grain market have been under pressure as the market sensed that the early flooding wouldn’t keep yields around the country from reaching near record levels, creating burdensome world carryouts. Well, there is some bad news the market still may have to digest, but I believe by this summer we can see some positive news.
Here’s the bad news: So many marketing gurus are saying the current financial environment in agriculture is bleak. Prices are cheap, the U.S. dollar is strong, and demand is weak. Many advisors don’t have a plan for grain in the bin or grain you plant next spring. I have been a professional trader for 39 years, and one thing I have learned is the best bull markets have started with the biggest carryouts. At the moment, storing grain doesn’t cover the cost of carrying the grain. However, we know that the American farmer is holding onto record amounts of grain. You can hope that the markets are near the lows, but if South America grows another record crop, and if there are minimal planting delays in the U.S. we could look at prices moving considerably lower. So, not only will you lose on storage, but you will lose on flat price as well.
Here’s the good news. You can sell your grain, and buy a call option to re-own it. This stops the storage expense. It minimizes losses should prices go down. Owning the call options keeps the door open to higher prices. At today’s prices you can buy a September 2016 $4.00-$5.00 option call spread for 20 cents. It’s our job at Top Third to not only tell when to buy an options, but equally as important is to advise you on when to SELL the option.
As we approach the monthly supply and demand report next week. You have to ask yourself, “Are you prepared to take advantage of however the market reacts?”
At Top Third we want you to be in position to take advantage of whatever the market does. We offer the following 3 easy steps to becoming a better marketer:
- Call us at 877-TT-HEDGE (884-3343) to discuss your marketing
- Sign up to receive 30 days of TopThird’s private grain or livestock marketing email
- Open an account at Top Third