• The big picture view shows the wheat market has not really changed, despite recent spring storms
  • A disciplined hedging plan allows you to take advantage of a market rally, lock in your crop’s profitability, and do so with peace of mind

What’s happened in the wheat market in the last few days is a perfect example of why you don’t bet the farm on a weather market. It wasn’t just the snowstorm across Kansas last week that sent the market higher. Funds had placed just about their largest short bet in wheat futures ever, and suddenly the rumors that the wheat crop had sustained heavy damage sent them rushing to cover their position.

But think about it — even with the potential of some rather heavy crop losses from the spring storm, has the wheat market really changed? Global supplies are still huge, domestic supplies from last year are so robust that cutting a couple hundred million bushels off of this years’ crop still wouldn’t represent a shortage.

This shows why a hedging plan needs a big-picture focus and is not tied to the emotions of sudden headline grabbing events. A disciplined hedging plan that takes into account the time of the year and the individual farmer’s profitability makes a world of difference in keeping your operations secure when everyone else is running in circles.

What would a farmer in Kansas be thinking right now as the snow in his backyard melts? Of course, the most important thing is to try to assess and limit the damage his wheat crop may have sustained. That’s a full-time job right there, and it’s not the time for marketing to be his focus. But with a plan already in place that has some hedges to lock in profitability and that asked the questions several months earlier: “What if there is a 30-cent rally?” then he was already prepared to take advantage of the market rally, lock in his crop’s profitability, and do so with peace of mind.

And if the big picture of the US wheat market does change – maybe crop losses do turn out to be heavy, maybe demand picks up as well – we will be watching for those big fundamental shifts and how they affect the marketing of your operation.

Below is a wheat matrix from Silveus Financial: How would you protect yourself today?

​Be prepared to get hedged on rallies – request a demo to learn how Silveus Financial can help.