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| As we fly deeper into global demand, particularly corn as it is now both a source of protein (ddgs) & energy.
The burden will be increasingly shifted to Users to utilize risk control.
The yet unanswered areas:
Convergence in soy & corn
Does a producer (& local grain originator) fix basis & remain open on flat price?
If you are 'out of position' (no rail & poor processor alternatives), what can be done through synthetics?
Does the producer who lacks storage move the grain & immediately write puts or buy calls or a combo of strategies.
These are subjects I plan to address in the new format.
Local basis records backed off from local processors, the River & Lakes & the Gulf are a must & should be anchored to July futures.
Does the producer attempt to enter swap arrangements-lender & processor coordination?
Southern hemisphere weather is going to be critical-
I also note today, Oil World, while they have cutting edge & reliable statistics, they are generally bearish (almost always) appear to be shifting to the bull side on meal.
Feedlots-the DDGS Cbot contract appears a failure at this point & I suggest options strategies for soy meal as an alternative...there is a correlation between meal & ddgs.
We have stepped into a new era of structural demand -but agriculture remains in a Residual Pricing position-I suggest traditional marketing risk control be updated. Many professions: Law, Medical & Medical Support have Continuing Education Requirements...Agriculture has entered the identical venue.
The Key, as always, seek marketing flexibility. The credit risk in dealing with ag vendors/buyers has increased & NO ONE can simply assume they are creditworthy as this part of the risk equation can change in a matter of hours, days or months.
We remain exposed to the traditional price cycles, yet more inelastic cycles with higher price-lows and "who knows what" on the upside? In addition the usual variables have escalated in spades.
Edited by SeniorCitizen 10/11/2010 11:58
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Several Pending Questions RE: Marketing
