Time to minimize risk and leave hedges in place

Time to minimize risk and leave hedges in place

Corn traders seem to be squaring up positions as we are now only a couple of days from the highly anticipated Prospective Planting Report and USDA Quarterly Stocks data. I can't imagine a massive move ahead of the numbers, but some of the recent bulls who have jumped in the trade may feel more at ease by banking profits and watching the fireworks from the sideline.  Globally, more analyst seem to be lowering their 2015 and 2016 crop production estimates as higher input cost look to limit planted corn acres.

The problem is without a full-blown weather story, its tough for me to imagine corn prices trading north of $4.50 per bushel. As a producer, this is NOT the point in time when I am looking to lift hedges. Instead this is the time when I am looking to reduce more risk and make more cash-sales on any significant rally. Producers who are still sitting on old crop supply should be thinking more seriously about dumping all remaining bushels and simply re-owning on the board with cheap limited risk bullish strategies. I'm just not a big fan of continuing to hold old-crop bushels with any type of remaining flat-price risk.

We all need to understand, nobody can outguess the weather. So as of right now, I don't think anybody can tell us with much certainty where prices will be at harvest. It's certainly fun to listen to the bullish weather "what if's, but that's not always reality. Weather markets don't always play out the way the forecasters have predicted, so building a market plan around the longer-term forecast is simply no good. As my grandfather always told me, "prepare for the worst and hope for the best." 

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