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Markets giving growers the option to embrace volatility

An agricultural economist with Advance Trading says ongoing volatility in the commodity markets can bring opportunities.

“You can either be afraid of volatility, be scared of it, or embrace it.”

Brian Basting tells Brownfield, “I still think there’s a sizable chunk of corn left out there, but I’d encourage your viewers to defend their balance sheet and get some floors underneath the market for these old crop bushels.”  He says, “There certainly can be a chance for a spring rally into summer, but we did see last year there never was a spring rally or summer rally.”

He says some producers are using marketing tools to position themselves for any future market bounce.

“If the basis is favorable enough, an option on some of your old crop bushels would be to go ahead and sell some of those bushels and purchase a call option.”  He says, “Obviously, you establish a price floor for those bushels once they’re sold, but you want to be a participant if the market were to have a rally.”

Basting says growers that are embracing volatility are locking in options with July calls to cover any potential rallies during the planting and early growing season.

AUDIO: Brian Basting – Advance Trading