This will be a year for farmers to concentrate on breakevens, cash flow and structuring positions to manage risk, according to Allendale founder and agricultural economist Bill Biedermann. Attendees at the Northwest Farm Managers meeting looked at ways to improve cash flow by moving grain and using a lease cost replacement strategy to retain ownership going into the summer weather markets. “We’re going to compare maintaining ownership in the cash position, whether it’s through straight ownership or basis contracts, and comparing that with some of the futures or options strategies,” says Biedermann. “It’s not complex, it’s just a matter of understanding and realizing you can do it.” Biedermann says there’s a possibility to see some inflation, inviting fund-traded money into the marketplace. This would drive the markets up. “Weather is going to be really the key factor, especially on corn and where stocks are already tightening. On the other hand, the beans could be the drag, because there are just so many soybeans in the country. If the bean market can’t rally, it will pop the corn off.”
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