Manage Risk During Spring Grain Price Run-Up

April 1, 2014 09:57 PM
Manage Risk During Spring Grain Price Run-Up

Recent unrest in Ukraine is only one factor pushing grain prices higher this spring. Producers should be protecting their bottom line even as a bullish tone prevails. 

"We started this rally ahead of problems developing in Ukraine. That was kind of the final dose of diesel fuel on the fire," says Chip Nellinger, Blue Reef Agri-Marketing Inc. "We got undervalued in the place of corn; we started doing a lot of export business. The funds, also, have had a huge change of ownership. They went from short 150,000 contracts of corn to now long 150,000 contracts of corn in less than two months." 

The swing in prices shows how much marketing has changed, adds Tommy Grisafi, Trade the Farm. "In the old days when there was a pit, you would see someone who was representing a fund come in and see them bid for 1,000 or 2,000. Now on the screen, it’s hard to keep track; it all happens so fast," Grisafi notes. 

The spreads are signaling what might lie ahead for prices—and are serving as an indicator that produ­cers should be thinking about ways to protect their bottom line. 

"The spreads are tightening in corn," Nellinger explains. "It’s a bullish scenario, yet the cash basis levels have dropped off dramatically in most areas of the Corn Belt. So that’s telling you, or at least telling me, that we’re probably getting a little overvalued now on corn futures."

Soybeans are a little different story with "such a dynamic there with old crop/new crop," Grisafi adds. "In any case, have a plan and be comfortable with your decision."

TP 052 T14117

Advisers with no bars remain unsold. *Adviser uses hedge-to-arrive contracts, which do not show up as cash sales until the basis is set. Market value is the average of cash sales, unsold portion plus futures/options value. For methodology, visit To have your crops sold on the advice of one of these advisers, call (800) 933-3996. If you have any questions or comments regarding the track record information, please contact Mark Soderberg, Tim Smith or Scott Harms of Archer Financial Services Inc. at (800) 933-3996.


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