[AZLiberty]

This is what futures trading is for. If they’re happy with $12 wheat, farmers can lock in that price by selling futures at that price. If they want to risk a $12 price on the hopes that the price will be even higher when they deliver this fall, they can do that instead.

[TigerLikesRooster]

Potential of bigger payout at the expense of added risk. The catch is that the risk may not be manageable.

I hope farmers do not go for toxic deal which promises phenomenal payout. That would be the undoing of all of us. They can still make good money by playing safe.

[NVDave]

What is difficult to contract is the basis.

And with $5 diesel around the corner, the basis is going to swing wildly.

[NVDave]

OK, let’s contract at $12.

Now a drought comes on, or similar problem, and you’re left with a shortfall on your contracts.

Worse yet, you contracted at $12, you have a significant event that cuts your yield and the cash market at your contract settlement time has gone to $15/bu.

Ain’t so easy now, is it?