Managing risk before emergence
Farming and risk have always gone hand in hand. The constant struggle with the unknowns associated with farming will never go away, but as we move into 2022 the stakes are higher now than they have ever been. Record input costs and supply chain disruptions have driven the estimated cost of production to new highs.
Locking in a known return on a percentage of your estimated production has always been the best option to minimize risk in farming. However, in a year when the average cost of production is as high as it is, the need to protect your investment is even more important.
From a historical perspective, the highest December corn futures will happen between March and June, while the highest November soybean futures will typically fall between May and August. Essentially, prices are highest when there are more variables affecting production, such as the number of acres planted or the weather during pollination. Once these variables have passed, the risk premiums associated with them begin to disperse and, at that point, we are completely at the mercy of supply and demand.
Therefore, it’s important to have discussions with your local MFA Crop Insurance agent to understand how risk can be further mitigated. These agents work hand in hand with MFA grain merchandisers to better understand the markets and help growers make informed decisions.
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