Ask FarmLink: Canola Hedging — Why and When

Farmers do an amazing job of keeping current on the latest agronomy findings, and many are keen to work on new and improved practices each year. But not everyone loves biology — some prefer the business side of farming and enjoy the time spent analyzing markets and setting up a hedging strategy.

Each crop type has its own marketing gauntlet, of course, as not all have functioning futures markets, and understanding and using futures has its own learning curve as well. Canola, until recently, was one of the few crops with easily accessible hedging options, so it’s the crop many farmers are most familiar with for this type of marketing strategy.

In this episode of Ask FarmLink, Jon Dreidger, with FarmLink Marketing Solutions, explains some of the reasons why it’s important to understand and use the canola futures market, why it may not always be the most affordable option. He also discusses how each strategy has its own set of trade-offs, and how farmers need to first establish their own risk tolerance levels before jumping all-in to a hedging strategy.

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