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EC SoDak | No problem
So last summer I had some $6 Dec 23 hedges let’s say. Since I planned to bin the crop, I knew I’d want to roll those to the March/May/or July contracts, I chose July. I rolled Dec 23 to July 24 at a 43 cent spread late Nov/early Dec (the spread is the difference between the December contract and the July contract). So, you take $6+ .43= 6.43 total board price. When you deliver and sell the physical, you lift your hedges and the board price at that time doesn’t matter because you already protected your price on the board. Typically the best time to hedge isn’t the best time to roll. Ie: Set Dec 24 hedges in May and June, but you typically get your best carry (spread) for rolling mid to late fall.
Keep in mind, we can have an inverted market (negative spread) and that’s the markets way of telling you to sell now or soon. Inverted markets typically happen if we are short on grain and may or may not have good demand. You also have the cost or opportunity cost of holding onto the grain that needs to be accounted for vs selling off the combine. That gets eaten out of your carry essentially.
So, to compare. If you were bearish prices and sold now for July 24, the board price is 4.49. So, at this point in time, you lost almost $2 vs hedging last summer at my $6 example and rolling last fall.
I think I was clear. Feel free to ask any more questions.
Edited by SoDak Farms 3/7/2024 16:55
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Pre harvest selling vs post harvest selling
