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Raelynn's Comments  02/16/22 4:00:49 PM

February 16, 2022

Isn’t this how we feel right now with these crazy commodity markets? 

However, I would argue that there is a good position you can take right now.  Closing cash bids this afternoon will put corn around $6.35 and soybeans around $15.75.  Not too shabby, and I'm guessing this would lock in a profit for you.   

If you’re hesitant to sell your old crop, my question is how confident are you that these prices will stick around?  Brazil is harvesting their bean crop as we speak.  Did they have the big crop losses that are priced into the market?  How will their growing season go for the second corn crop? Will Argentina stay dry long enough to also see a crop loss?  Will Russia invade Ukraine?  Big question here…. What will we see for projected 2022 US acres in March?  Do higher prices buy more acres? How about the US growing season?   

If you know the answers to the above questions, shoot me a phone call to share your tricks. ?? But to the rest of us, these are very big unknowns.  You can argue price movement in both directions depending on where you stand on the above topics.  However, what is not debatable are the prices I listed above.  If you have a large amount of old crop left to price, don’t leave $6.00+ corn and $15.00+ beans in the bin with the hopes of seeing another dollar.  If you’re concerned about losing out on an upside swing consider re-owning with calls.  

Here’s an option strategy for corn with current prices: 
Sell 5000 bushels of corn at $6.35
Buy July $6.40 call and sell a $7.40 call for 30 cents.  
You will receive no less than $6.05 for your 5000 bushels of corn.  (Receive $6.35 cash, spend $.30 for calls) There is no margin risk with this, and you will continue to make money up to $7.40 (July futures).  You can hold this trade through June 24th.  

This is a common way to re-own bushels when dealing with weather premium swings.  Same strategy can apply to beans.  

Don’t fret over your marketing when you can make a profit right now.  If you have a trade account set up with us, use it to manage risk.  If not, give us a call and John or I would be happy to discuss how to set it up and different trading strategies to fit your needs.  Opening a trade account is free! 

Thanks for reading and have a great evening!


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