Considerations When Marketing Commodities Far Ahead of Harvest

Crop and livestock producers face a complex challenge when marketing. High commodity prices give a strong incentive to sell, price, or protect revenue far ahead of the traditional cash sale date. However, high and volatile input costs such as rent, fertilizer and feed work against locking in a profit. What follows is a general overview of preliminary material for a series of workshops and programming. The outline of the document and workshops is similar. At the beginning of the workshops (or components) we ask a series of questions of participants. We provide the general format of those here. Then we cover the incentives to market far ahead of harvest or of the typical cash transaction period. The primary marketing strategy discussed is rolling of nearby to deferred contracts in a variety of settings. Input risks are then covered as costs may not be fixed at the same time that output prices may be fixed. Finally, we discuss constraints or limitations based on available insurance coverage and overall risk