Whenever someone mentions risk management in grain marketing, someone also mentions futures, options, puts, calls and, eventually, most people’s eyes glaze over. Anyone who has done a marketing course has also run through a hedging example or five in their education only to find that these tidy examples involving one crop rarely mirror real life. Enter a futures broker — someone who does this several times a day — and all your problems are solved, right? Well, maybe not.
In this latest Ask FarmLink episode, FarmLink Marketing Solutions co-founder Brenda Tjaden Lepp discusses what she views as a few of the barriers to farmers hiring futures brokers, while also explaining what it is they do and why they may act the way they do. A past bad experience may have more to do with the circumstances than the actual role of a futures broker itself, which Tjaden Lepp also explains here. A better understanding of hedging and a comfort level with the process is key to a functioning relationship with a futures broker.
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