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Ag Marketing 101: 8 FREE Guides for Hedgers and Speculators



Everything you need to know about creating effective hedging strategies

Grain hedgers, such as farmers, merchandisers, and producers need to know how to  protect themselves against rising and declining prices. If you want to know how to create effective hedging strategies, look no further than this resource, which has a total of eight guides at the ready, covering everything from grain reports, futures spreads, covered calls, concepts like basis and bear put spreads and more. Brought to you by the Daniels Trading ag-focused team of industry experts, these guides provide comprehensive overviews and practical examples designed to help you use the trading tools you need. 

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Chapter 1

Introduction to Grain Hedging with Futures and Options

Looking for a place to start in managing your risk in the futures and options markets? In this guide, designed to help producers and end-users learn about how to hedge their cash positions and transfer price risk, you'll discover:

  • Who Hedges Grains with Futures and Options
  • Why Do Producers and Users Hedge?
  • Example #1: Corn Futures
  • Why Use Futures Over Forwards
  • Example #2: Corn Options
  • Why Use Options Over Futures and Forwards
  • How to Get Started

"Producers and users hedge because they do not want to face the risk of unforeseen price fluctuations between now and the time of purchase or sale of their grain. Transferring the risk and setting a price for grain provides a form of financial security for the hedger. "



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Chapter 2

Futures Traders Guide to the WASDE

In this guide, you'll learn how to use the WASDE report to gain insights into the grain markets and develop a stellar trading strategy. The report is a valuable resource and one that you should be reading and using in your strategies.

In this guide, we'll cover all you need to know, including:

  • What is the WASDE?
  • What Markets Does the WASDE Cover?
  • What is the Highlights Report?
  • What Exactly Are the Balance Sheets?
  • The Corn and Wheat Balance Sheets

"The World Agricultural Supply and Demand Estimates (WASDE) report is a detailed overview of the USDA’s forecasts of supply and demand for crops (US and global) and livestock (US only). The report gets its information from a number of statistical reports published by USDA and other government agencies, and provides a framework for additional USDA reports."


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Chapter 3

Guide to USDA Grain Reports

If you are trading in the grain markets, you need to be reading the grain reports on a regular basis.

Use this guide to learn about:

  • Crop Progress reports
  • Grain Stock Reports
  • Regularly produced grain reports
  • Why these reports are so important
  • What impact they have on the markets
  • Most importantly, how to use them to your best advantage.

"USDA grain reports have the potential to move markets. Grain traders, farmers, and end-users should all know which reports the USDA releases, what information these reports contain, and when they are released. "


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Chapter 4

Hedger's Guide to Futures Spread

Futures spread trading is a good alternative to outright futures trades for traders. Although it has traditionally been known as a professional’s trading strategy, we feel it is a trading method that can and should be in everyone’s arsenal.

This guide will talk through how to use spread and give you some examples so you will have a solid foundation of knowledge in this essential trading strategy.

In Hedger's Guide to Futures Spread, you will learn:

  • What is the Spread?
  • When is the Spread weakened?
  • When is the Spread strengthened?
  • Different types of Spreads and how each of them can meet an outlook in the market.

"Futures spreads are a worthwhile alternative to outright futures trades for the savvy trader. "


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Chapter 5

Introduction to the Concept of Basis

Understanding the concept of basis is essential for farmers and end-users to help them decide on hedging strategies. If you know your local grain balance, then you can decide whether to fully or only partially hedge a grain sale/purchase to benefit from a change in the basis.

To learn more about this concept and how to apply it, read our guide, where we cover topics such as:

  • What is the Basis?
  • What Changes the Basis?
  • How Does the Basis Affect Different Market Participants?

"Hedgers who understand their local grain basis, meaning they understand their local supply and demand dynamics in a market, can really help themselves in their cash marketing and hedging on the board. "


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Chapter 6

Hedgers Guide to Bear Put Spreads

This guide walks you through the important concept of bear put spreads. These spreads are designed to protect farmers and decrease their risk if the price of a crop goes down. The advantage of a put spread is that it offers protection against lower prices but also allows the farmer to sell his cash grain higher if the markets rally.

In this guide you'll discover:

  • What is a Bear Put Spread
  • Easy to Understand Examples
  • What Happens if Prices Stay the Same or Go Higher

"Bear put spreads are used by farmers who are looking to hedge their cash crop in case of a decline in prices. If you expect the price of the crop to go down, then you want to protect yourself from those losses -- that’s where a put spread comes into play. A bear put spread involves the purchase of a put at a specified strike price while simultaneously selling a put at a lower strike price with the same expiration date. Simply stated, this means that you buy a put and also sell a put with a lower strike price. The objective of a bear put spread is to take advantage of a decline in the price of the underlying asset. "


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Chapter 7

Hedgers Guide to Covered Calls

Covered calls are a great way to slowly build earnings over time during choppy markets. This strategy is good for producers who want to hold their cash grain but are comfortable selling
grain at a higher price.

There are some nuances to this strategy, so take a look at our guide to fully understand the details.

We'll go through the basics, give you some good examples of how to put covered calls into play, and give you a video instruction link as well. 

"Covered calls may be a good way for farmers to add nickels and dimes each month to their final sales if their options expire as worthless; if the grain increases in price, the farmer receives a higher price for the cash crop sales."


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Chapter 8

Hedger's Guide to Combining Puts and Calls with Cash Sales

This guide is chock-full of strategies for rising, falling and stagnant prices. If you want good examples, with complete explanations of why a particular strategy will work, this is the guide for you. Starting with an overview, we look at the basic trade options available:

  • Call options (Buy/Sell)
  • Put options (Buy/Sell in both Bearish and Bullish markets)
  • Combinations of call and put options

Take a look and understand what to do when:

  • Strategies When Falling Prices are Anticipated
  • Strategies When Rising Prices are Anticipated
  • Strategies When Flat Prices are Anticipated

"There are a variety of possibilities market participants have to combine call and put options with cash sales when expecting rising, falling or flat prices."


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