National Farmers Urges Producers To Use Put and Call Options Now

By Harold Walker

The agricultural industry and particularly grain producers, are experiencing significant marketing challenges.

Traditionally, marketing opportunities for fall crops are more attractive in the spring and early summer due to planting issues, weather, and crop conditions in other parts of the world. Unfortunately, this seems to be the season of turbulence in the marketplace.

The threat of tariffs on commodities traded between nations has led to increased volatility in the marketplace with little support for producers. Volatile conditions are further driven by the absence of a Farm Bill. We encourage all members to contact their congressional representatives and ask them to support a comprehensive Farm Bill favorable to producers of food and fiber in the United States.

Currently, Brazil and Argentina have become the principal suppliers of soybeans for the world export market. Increased production of corn in those and other South American countries will make them significant participants in the supply chain, also. Until recently, the United States was the primary supplier of those commodities for export markets.

On a more positive note, NForganics has been successful in negotiating some attractive contracts and sales for our organic and non-GMO grain producers. Oats, specialty wheat varieties, and soybeans are the bright spots. The demand for organic wheat produced by our Montana members has experienced a significant increase in volume. The current demand for food-grade organic oats has created opportunities for our producers as well.

Conventional grain markets are currently being challenged by low prices. With all the tariff activity and uncertainty, many of our traditional export markets are seeking other trading partners, potentially increasing domestic ending stocks and resulting in lower prices here at home. Historically, when an export market is lost, it is lost forever.

The utilization of put and call options to help mitigate this volatility is recommended. Don Roose of US Commodities, Des Moines, Iowa, reports market conditions and recommendations to the daily National Farmers grain marketing calls. His insight and international marketing experience are invaluable in helping develop risk management strategies for our grain producers.

Contact your National Farmers marketing representative and learn our latest approach in maximizing your grain returns.