Take Control of Fall Markets

August 26, 2016 12:00 PM

There’s lots of talk of near-record yields throughout farm country. If those predictions materialize, commodity prices could reach even lower lows. Unfortunately, a lot of farmers have 2016 corn unpriced right now, and it’s time to take control, according to Brian Basting of Advanced Trading.

“Once we get past pollination, growers have a lot of 2016 corn unpriced for two reasons,” he recently told AgDay TV host Clinton Griffiths.

Basting says growers either are experiencing yields that exceed what prior expectations were, or they have been attracted by the soybean new crop opportunity. Yet, he says now is the time to take control.

“Getting control means getting a floor underneath the market,” he says. “We have to respect that harvest is still ahead of us in September and October, and harvest pressure could certainly rematerialize if these yields achieve expectations.”

Basting recommends producers either use a call option or a put option to ensure a base price with which they are content.

“I think anytime you talk about getting control, it gives you the opportunity to cheer for higher prices via a call option purchase or a put options purchase,” he says.

Considering on-farm storage? It’s important for farmers to pay attention to what is going on the market. Basting calls this being “student of the market.” It might be time to sell carry.

“If there’s carry in the market and you’re going to store on-farm, you might consider selling that carry,” he says. “Do what the market is telling you to do.”

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