Answer Happy

Question 42 (16 points) It's now March of 2023 and you're in the beginning stages of setting up a marketing plan for your upcoming soybean production for 2023. You're first going through the tools available to you and considering whether they're right for you. Here's your situation: Last year was great for your farm and so you used the proceeds to expand, taking out some loans to afford the expansion. Now, in order to pay off those loans, you need a decent price. Currently, the cash price for forward contracts is fairly low (not awful, not a bit lower than you'd expect and much lower than 2022) and the basis being offered with contracts is also slightly weaker than normal. Prices seem pretty volatile and could change quickly but there's no consensus about what the actual futures price will be at harvest. As is typical, the futures price for the harvest month is LOWER than the futures prices further out. However, because of your loans, you do need to sell at least some of your harvest in November or December. A. For each tool listed below, you will discuss whether this is a good option, an okay option, or a bad option and and WHY. (12) B. Next you will list the top three tools you think you should consider using and why you think those three are the best. (3)

B. Next you will list the top three tools you think you should consider using and why you think those three are the best. (3) C. State the riskiest tool (there is only one right answer!) (1) For A, copy and paste the different tools below into the answer box. Basis contract: Delayed pricing: Forward contract: Storage: Spot sale (leave unpriced until harvest): Hedging with futures: Storage hedge: HTA contract: B. Top 3: C. Of all the marketing tools available (not just your top 3), which is the RISKIEST? 4