Using Hedging to Protect Your Investment

Using Hedging to Protect Your Investment

Welcome to Open Range, I’m KayDee Gilkey. Stay tuned because after the break I’ll check in with our field reporter, Greg Martin for the AgriBeef Minute.

I’m Greg Martin with today’s AgriBeef Minute. How do you protect your valuable livestock investment. Casey Bieroth, with Agri-Beef Risk Management recommends looking at hedging.

BIEROTH: Hedging is a form of risk management. When we talk about in terms of ag markets generally it’s used as a way for producers to protect against price risk. Being a producer you have a commodity that you own today that you’re planning on selling at a later date, in the meantime that price can be up and down and all around in between now and then.

Bieroth talks about getting started with hedging.

BIEROTH: The biggest thing I would recommend to someone who is not sure about hedging is really familiarize yourself with the process and how it works and there’s resources that you can utilize to do that or you can talk to people who have some experience with it and they can really kind of hold your hand through the initial process and help you out quite a bit.

And he says you can ease your way in.

BIEROTH: Once you understand the basic mechanics of the futures market and how the hedging works, we can start off there and you can hedge with simply using futures and then once you kind of get comfortable with that we can look at option strategies that are a little more complex but once you are a little bit more versed in how the futures market works there’s some things we can do in the options market that give you a little bit more flexibility.

Of course he recommends a good place to start is with a call to AgriBeef. I’m Greg Martin and that’s today’s AgriBeef Minute.

Thanks Greg. Don’t forget Greg will be back each Wednesday with the AgriBeef Minute. Agri Beef Co - Real Families, Great People, Exceptional Beef. I’m KayDee Gilkey.   

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