Being a good steward of the land is a priority for many small farms. Doing so often requires the need for alternative markets for the our products. Farm gate sales and farmers markets are two strategies that are implemented by small operations. In some communities these opportunities don't exist or they are entirely seasonal, and so a third strategy is presented here, namely hedging using commodity futures.
Our input and production goals will be met while caring for our land, and we will attempt to manage our marketing risk using commodity futures offered by the Chicago Mercantile Exchange.
Please Note -
Trading in futures involves substantial risk of loss, and in presenting my plans in this blog I am in no way suggesting that they be followed by anyone else. This is an opportunity to examine the success and failure of my plan to hedge markets related to my farming enterprise, and attempt to farm for profit with environmentally sound practices.
I always use a stop!
Trading Week - March 19 to 23
Oats has been trending down and is essentially oversold. The oats contracts have medium volatility, but the overall bias is bullish and the funds remain long. It needs to fall just a bit farther however before I can consider this trade.
ZO May18 enter long @ 238
"Corn The Star"
Corn is correcting down from being overbought and is probably about halfway there. The market exhibits low valatility. Exports have been great although NAFTA is a concern, with Mexico a huge importer of corn. It needs to fall farther before I can consider this trade.
ZC May18 enter long @ 372
ZC Dec18 enter long @ 395
Lean hogs are probably close to a seasonal bottom, but this market is volatile and unpredictable. Last week spread trade drove down the April contract and drove up the others. On Friday the reverse was true for a period of time. The April contract is oversold and has an inverted hammer candle, which might suggest not only a bottom but a turn upward soon. The June contract might dip occasionally with spread trade so there may be an opportunity to buy. The investment funds have been profit taking and might be ready to drive these contracts up. For that to happen Mexico and Canada have to keep buying pork, and spring BBQ season needs to get fired up.
HE April18 enter long 2 @ 65.450
HE June18 enter long 1 @ 77.85