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Producers might be able to capitalize on market volatility

Senior research analyst Matt Erickson with Terrain says there could be an opportunity for producers to capitalize of price volatility this year.

“One effective approach could be to spread sales throughout the marketing year. I know a lot of producers use options to maintain price flexibility in the marketplace and then they can also diversify or combine their marketing strategies to help mitigate some downside risk.”

He tells Brownfield now is a good time for producers to “stress test” their balance sheets. “Think about different approaches that basically look at different yield and acreage combinations and what that could mean for prices.”

For example, Erickson says, “There is some opportunity on upside price volatility that could happen. All it takes for that if demand stays consistent where it’s at 15.8 billion bushels, is a three-bushel reduction and yield down to 178.”

He says prices are most volatile at this point in the growing season.  

Matt Erickson: