Low grain prices may be frustrating for farmers but it could be a real opportunity for end users according to Brian Basting of Advance Trading.
During a conversation on AgDay with Clinton Griffiths, Basting said now is the time for end users to take advantage of feed prices.
“An end user should be looking at locking in the remainder of spring needs, perhaps the summer and maybe all the way into fall,” says Basting. “You could consider, for example, buying the cash and simultaneously purchasing a put option that would give that user an opportunity to participate if the market continues to go lower.”
Basting says another strategy to consider for an end user would be the straight purchase of a call option which provides unlimited upside but also does not require margin calls if the market continues to grind lower.
“We’ve got a lot of unknowns going here and the growing season has just started from an end user standpoint,” says Basting. “The risk would be higher prices [including] some type of structural problem with crops in the 2019 planting or growing season.”
