Posted by: cffm | May 14, 2013

Commodity Challenge Tuesday Tip: Old Crop vs. New Crop (or Pre-Harvest vs. Post-Harvest)



In a Post-harvest (or “Old Crop”) game you’re a producer and your crop has already been harvested, it sits in storage and you can make a decision to sell that in the cash market, that is, today’s market to your local elevator at today’s price…or in the Forward Market the Futures Market or the Options Market.

Now, in Pre-harvest marketing or what we might call a “New Crop” Game harvest hasn’t occurred yet it may be months in advance, and your options for selling that grain are more limited, you have no cash grain to sell there’s nothing physical in inventory.
So you are limited to Forward Contracts, Futures Contracts and Options Contracts to price your grain.

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Responses

  1. Enhinlteging the world, one helpful article at a time.


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