Oats prices at new record high prices?

[JoeyPotato]

And for the record hedging is not a investment
account. A investment account is a speculative
account. A hedge is supposed to take the risk out of a
situation, not increase it. There is nothing speculative
about it.

Unless you start trading coffee one day instead of
taking the price risk out of oats. lol. Im sure we have
all heard of someone who has done that.

[cottonpicken]

A hedge is as oxy-moronic as it gets.

A position is a position-you either lose or gain.

[Choice2U]

I agree with Cotton EXCEPT when you make the decision based on locking in a profit which is what Joeypotato was referring to. If your goal is managing risk versus hitting the market peak and you lock in a price which secures a profit level then the decision is still correct AT THE TIME IT WAS MADE regardless of the price movement afterward. If you are speculating, then yes, for every winner there is a loser.

[cottonpicken]

I just cant wrap my head around it?

I sell canola and bet that it falls or rises?

Because i dont want to miss out on a move?That
may move against me?

I just dont see the logic.

This is black and white you lose or gain,painting a
grey picture of "well i had to because of the risk"
makes no sence

[cottonpicken]

Must be some brokers on here dieing for farmers to
get into the options game with them so they can get
their cut like there is on popular amerkano sites.

A position is a position-EINSTEINS

[TOM4CWB]

CP;

Put option: The right, but not the obligation... to be short the futures at the Strike Price the Put Option is purchased at.

The most that can be lost... is the premium cost.

Obviously very different than being short the futures... if an early frost or big drought/heat hit US Beans; spikeing the futures up to some high value like $18/bu in 2008.

I would be surprised if you didn't know this.

I can't believe the CWB won't offer minimum price contracts using options!

Much less risk... for the grower and the CWB!

But I must assume mitigating risk and best serving grain farmers is not the CWB's objective... it is to save the monopoly and provide cheap feed grains for livestock in Canada.

[btjadenlepp]

tom, the early payment option (epo) is a
minimum price contract using puts.

[btjadenlepp]

'it's just a matter of time until oats
prices rocket higher'.

don't lose sight of the fact it's
already taken off pretty impressively.
lots of good, profitable pricing
opportunities out there, for all
positions.

not arguing with the outlook, just think
it's risky to expect too much in an
uncertain world.

www.farmlinksolutions.ca

[tmyrfield]

cotton
as soon as you plant a crop you already have a long position, a hedge means you are offsetting that long with a short.
if canola goes up your production increases in value but your futures contract drops in value and vice versa. hence your crop is hedged at the price you select.

[Choice2U]

I am a small farmer, not a broker. I used Pool Commodity Trading Services about 10 years ago and lost money on a Soybean oil option when a rain showed up in US within about 2 weeks of it expiring....until then I was ahead of the game. This tweeked my interest in the concept. I play with puts and calls in the $800 - $1K range and have lost more times than have won but on actual dollars, I am up significantly because with a volatile market, one mistake selling too soon or late with no fall back can cost big bucks and hedging with options has been a counter balance at times when there are big market moves that I misread. Made (profit after options cost and commissions) about $5K in 2008 with a couple puts. Sold too soon or would have made about $15K. Lost about 2.7K in 2009 and am up in 2010 about $8K. Why is it so hard for people to get a grip on using options along with holding or selling the physical property. ITS ONE TOOL IN A TOOL BOX that has worked for me and I'm no genius. Cotton mentioned that 80% of options expire worthless a year or so ago. He's probably right because I have lost more times (about 8 times) than won (4 times) but with not risking big $ each time, when I won, I won much bigger than I have ever lost.