12/15/08 Locking in commodity rates

Some farmers are locking in commodity rates using today's prices. Investors too. David Ward of Commodity and Ingredient Hedging says the best time to lock in margins for certain times of the year may be six or nine months before you actually buy the grain or market the animals. With the current economic situation Ward is looking a year down the road. WARD "There's actually some nice margins to work with. The idea is with the economy as poor as it is, the tightness in credit and the volatility of grains people are forecasting a far amount of liquidation of some of the domestic livestock herd and that's been building some premium in the price." There's also a lot to be looking at with the incoming Obama administration and a new Congress. One key issue is ethanol and the policies associated with that. WARD "For example last year abut a fourth of the corn crop went into production. Next year its forecast at about a third of the corn crop will go into ethanol, that's a massive reduction of our corn supply." And then there's the trade issues and how they affect how other countries will deal with the US. WARD "Our foreign policies, our exchange rates, foreign currencies for the countries that buy our products make a big difference." He says the economic conditions in other countries will also have an impact on their willingness to trade with the US over the next six to twelve months. Today's Idaho Ag News Bill Scott