Grain Journal - January/February 2009 - (Page 78) Hedging Strategies PRICING RISKS AND OPPORTUNITIES IN A VOLATILE MARKET HEDGING Over the past 18 months cash and futures or so, daily ranges like those transactions and, STRATEGIES in the chart have become if possible, to Philip Luce fairly common. Markets make the cash price have achieved trading contingent on ranges in a single session where the futures that used to occur over order is filled. weeks or months. Many country Here are two important elevators have issues to keep in mind as stopped offering firm prices we navigate these turbuto either sellers or buyers lent markets. outside of trading hours, inPricing Policies. Frestead accepting target prices quent big swings in the futo be entered in the next tures market can turn rouavailable session. tine hedging procedures into a risky Pricing Opportunities. It is comaffair. It’s more important than ever to mon for elevators to take “soft” pricing have as little time as possible between orders from farmers or buyers, with an agreement that they will call when the market gets close to the desired price. Highs and lows can come and go very quickly these days, and there is a good chance that all the calls cannot be made before the price changes. With firm price offers, the elevator can enter open orders that give their customers a much better chance of getting a contract at their chosen price. Philip Luce is a grain merchandising specialist with White Commercial Corp., Stuart, FL; 772283-2420. Response No. 781 78 GJ J/F http://www.hiroller.com http://www.hiroller.com
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