Cheaper Feed Prices

Tim Hammerich

News Reporter

Markets were closed Friday in observance of the Good Friday holiday. We’re taking this break from trading to look at one of the few positive opportunities in ag markets: cheaper feed prices. Joe Vaclavik of Standard Grain says there are some options out there that livestock producers may want to consider.

Vaclavik… “And of course when it comes to the grain markets, what's good for the farmer is bad for the livestock guy and vice versa in most situations. So when we get into a situation like this where prices are at multi-year lows for feed grains, for corn in particular right now. Great opportunity to take a look at locking up some feed needs. And that could be done in the cash market. It could be done via a futures contract. You can just set some ceilings using say, call options or some put versus call strategies, where maybe you buy a call and sell a put to pay for it. Some sort of really simple spread like that. But I think that as far as the livestock business is concerned, I know it's a mess right now. I know the cattle business is a mess. That may be another opportunity is if you are somebody who feeds livestock, this is maybe an opportunity to lock up a cheap corn, especially while the board is down and the basis has fallen off.”

As always, treat that as useful information and not necessarily a trading recommendation. Be sure to consult a risk management adviser before making any financial decisions.