There’s a lot of ownership of old crop corn in the U.S.
Brian Basting of Advance Trading, Inc. says there was not a lot of forward pricing because yields exceeded farmer expectations and there weren’t higher prices for corn like there was for soybeans last summer. He wants to encourage people to get pricing in place.
“Either buy a put option if your basis is long favorable or you can make a sale and buy a call option in case we have weather in South America or in the U.S. in the spring or summer,” said Basting.
Elaine Kub, author of “Mastering the Grain Markets,” says people are gun shy about pre-harvest hedging.
“At this point in 2017, we have to expect that it’s going to be a normal production year with normal seasonal patterns,” said Kub. “You will do better with aggressive sales in the spring rather getting caught with excess yield and getting trapped into the scenario with having too much old crop.”
Watch Kub and Basting discuss strategies to deal with old crop corn on U.S. Farm Report above.