One Farmer’s Approach to the 2024 Growing Season
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Producers are increasingly using options as a tool to manage the increasing risks we experience around input costs, weather, geopolitical conflict or trade. At CME Group, weekly options in the ag complex have seen a big jump in trading, with a record of more than 20,000 traded daily in March, just ahead of planting. One of the key benefits is the ability to precisely hedge around a specific event with weekly expirations.

Ag weekly options

On the agronomic side, we generally have our nitrogen split-applied to spread out our risk. At least half of our nitrogen is put on in the fall with the rest side-dressed after the crop comes up. Spring 2024 was a bit of a challenge due to wet weather conditions. 

We were quite fortunate in our neighborhood in central Illinois, though. We were able to plant our tiled ground which happens to be some of our better ground in April, while planting our lighter ground in mid-May. We didn’t get any heavy rains, which was a blessing. Our stands are excellent so far with moisture levels in good shape as we entered the summer months.

Thinking About Rates and Inflation

Many producers are optimistic heading into the later summer months. The late spring saw good corn and soybean planting progress, according to the USDA, and the Ag Economy Barometer showed an increase in future expectations among producers as prices rose into June. Still, farmers everywhere are watching interest rates, inflation and an election cycle that could throw some wildcards in place. 

There is only so much that a producer can control. The most important thing is to have a good handle on those things we can control, like managing our risk by protecting profit margins when they are present. Given wild swings in profitability the last four years, risk management has become one of a grain producer’s most critical tools. 

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