Progressive Hedge

Helping Growers Capture Value

CFS Progressive Hedge

Following the markets and making the right decisions can be difficult. Commodity prices can change quickly, and sometimes there are only a few days or even hours to decide to buy or sell. 

Although we generally think about the grain markets with this volatility, the fertilizer markets can be equally volatile. At CFS, we are continuously looking for new ways to help farmers cover their risks. 

The CFS Progressive Hedge Program is a way to spread risk and cover input costs while marketing grain. This program is a program that ties together pricing fertilizer as well as selling grain. 

Progressive Hedge Benefits

  1. Helps with cash flow needs–no money down
  2. Very flexible for end of year tax-related decisions
  3. Lock in profitable Corn/UAN ratio
  4. Where else can a grower lock in their fertilizer needs at a good value, nearly 16 months before application & with no money down?
  5. Consider paying for 2022 Fertilizer needs in 2021 or '22

The program uses ratios based on the price of corn and fertilizer. These ratios may or may not coincide with the corn price being high or the fertilizer price being lower, but rather a level where history tells us is a good spot to be. A progressive hedge can be used to purchase UAN, Urea, or MAP. When a certain ratio is reached (determined by the grower and their advisor), we create a grain contract and fertilizer contract for a certain number of tons. A Hedge to Arrive contract is put into place in which the grower can then set the basis and delivery location as they see fit. A fertilizer contract is then generated as well, and dollars can be exchanged and used on either side of the year as your tax situation would dictate.

For additional information, please contact any CFS Agronomy Salespeople or CFS Grain Marketing Advisors.

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