Progressive Hedge - Make Smart Buying Decisions & Cover Risk
Jun 30, 2020
Chris Messner, Regional Sales Agronomist
Keeping up with the markets today has become increasingly difficult, let alone making the right decisions when it comes to buying and selling. We have all seen how fast commodity prices can change, sometimes leaving only a few days or even hours to decide whether to buy or sell. Although we generally think about the volatility in grain markets, the fertilizer markets can be equally as volatile. At CFS, we are continually looking for ways to help farmers cover some of their risks and make smart buying and selling decisions when the market says it is time. We at CFS have a new program called Progressive Hedge that will help you with this process.
The progressive hedge program ties together pricing fertilizer and selling grain. It allows us to use ratios based on the price of corn and the price of 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 the right spot to be. Fertilizer products included in the program include UAN, urea, or MAP. Simply put, the progressive hedge program is another way to spread risk and cover input costs while marketing grain, when the ratio determined by the grower and their advisor hits, grain, and fertilizer contracts created for a certain number of tons. A Hedge to Arrive Grain Contract is made, which allows the grower to set the basis and delivery location as they see fit. We also create a fertilizer contract with dollars that can be exchanged and used on either side of the year as your tax situation would dictate. This explanation is the short and sweet version of the program, so please contact any of the CFS agronomy salespeople or grain marketing advisors to get more information.
Keeping up with the markets today has become increasingly difficult, let alone making the right decisions when it comes to buying and selling. We have all seen how fast commodity prices can change, sometimes leaving only a few days or even hours to decide whether to buy or sell. Although we generally think about the volatility in grain markets, the fertilizer markets can be equally as volatile. At CFS, we are continually looking for ways to help farmers cover some of their risks and make smart buying and selling decisions when the market says it is time. We at CFS have a new program called Progressive Hedge that will help you with this process.
The progressive hedge program ties together pricing fertilizer and selling grain. It allows us to use ratios based on the price of corn and the price of 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 the right spot to be. Fertilizer products included in the program include UAN, urea, or MAP. Simply put, the progressive hedge program is another way to spread risk and cover input costs while marketing grain, when the ratio determined by the grower and their advisor hits, grain, and fertilizer contracts created for a certain number of tons. A Hedge to Arrive Grain Contract is made, which allows the grower to set the basis and delivery location as they see fit. We also create a fertilizer contract with dollars that can be exchanged and used on either side of the year as your tax situation would dictate. This explanation is the short and sweet version of the program, so please contact any of the CFS agronomy salespeople or grain marketing advisors to get more information.
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Highlights as of 5/16:
Corn:
Planting and weather conditions are the name of the game currently. With planting progress looking very favorable and the weather forecast showing above normal temps and below normal precipitation for much of the corn belt all signs point to very good planting conditions. With that, we gave up yesterday’s gains on old crop and put in some new lows on December corn.
Corn:
Planting and weather conditions are the name of the game currently. With planting progress looking very favorable and the weather forecast showing above normal temps and below normal precipitation for much of the corn belt all signs point to very good planting conditions. With that, we gave up yesterday’s gains on old crop and put in some new lows on December corn.