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Rising Interest Rates and Volatile Trade Discussed by Purdue Ag Economists in Orlando


Rising Interest Rates and Volatile Trade Discussed by Purdue Ag Economists in Orlando

Commodity Classic in Orlando concluded over the weekend with The Charlie Daniels Band turning out the lights on Saturday night. However, the big headliner on Saturday was actually the Purdue Center for Commercial Agriculture’s presentation about how to manage your farm in times of rising interest rates and volatile trade. While not as famous as The Devil Went Down to Georgia, that topic is squarely on the minds of farmers.

Dr. Jim Mintert, director for the Purdue Center for Commercial Agriculture, says that there are opportunities out there for farmers who are managing their risk by having a marketing plan, and actually executing that marketing plan.

“If you look at current futures prices, and you know we’ve got a brand new crop basis forecasting tool on our website, if you take a look at the basis history and use that as a guide to what the basis is likely to be this fall, and especially as you look into the spring of 2020, and take advantage of those storage facilities that so many Indiana and Eastern Corn Belt farmers have built in recent years, there’s some opportunities to lock in prices that are either at or very close to full cost of production.”

That crop basis forecasting tool can be found here.

With trade issues with China, Mexico, Canada, Japan, etc., up in the air, the future is impossible to predict. So, Mintert says that from the risk management side, you have to make your decisions from a portfolio standpoint.

“So that means looking at the ‘19 crop, for example, pricing a portion of it now, or thinking about pricing a portion of it now, and wait and see what the opportunities are a little later in the year recognizing that, truthfully, and I think the last year and a half or so is a perfect case of illustrating that, we can’t forecast those kind of events with any degree of accuracy. So, we’ve got to split our risk, manage our risk pretty aggressively, and the first part of that marketing plan is knowing what your own costs are so that you know when you lock in a price what that means to you from a profitability standpoint.”

Mintert was joined by Dr. Jason Henderson, Associate Dean and Director of Purdue Extension, Dr. Michael Langemeier, and Fred Seamon from CME Group in Orlando. While somewhat joking about Mintert and friends being the big headliner on Saturday, they have been one of the more popular sessions at Commodity Classic in recent years.

So, what affect does this all have on farmer attitudes? We’ll find out today when the Purdue/CME Group Ag Barometer is released. Watch for that at hoosieragtoday.com.