Todd Davis, Extension Economist, University of Kentucky
Current Price Risk Management Alternatives for Corn and Soybeans It is not too early to use price risk management tools to protect some of the projected corn and soybean revenue for this year. Risk management alternatives include locking in a cash price using cash-forward contracts (CFC) on a conservative percentage of expected production. A CFC removes price risk but you may feel regret if cash prices at harvest are higher than the CFC price. Another alternative is to buy put options to place a price floor but still benefit from any potential increase in futures price from now until harvest.
Current Price Risk Management Alternatives for Corn and Soybeans It is not too early to use price risk management tools to protect some of the projected corn and soybean revenue for this year. Risk management alternatives include locking in a cash price using cash-forward contracts (CFC) on a conservative percentage of expected production. A CFC removes price risk but you may feel regret if cash prices at harvest are higher than the CFC price. Another alternative is to buy put options to place a price floor but still benefit from any potential increase in futures price from now until harvest.
