When it comes to marketing plans, risk management tools such as futures and options contracts, and even crop insurance that really helps to protect feed assets, many producers admit to needing more help. And with the huge capital investments required in the beef sector, the revenue must roll in.
We refer a lot to risk management tools, and they’re just as handy as vice grips or your GPS when it comes to staying in the black. Of course, these tools come in the form of contracts. But this process is about a lot more than shuffling papers.
The contracts come in four basic forms. Think of them as written ways to get specific about what the marketing opportunities really are, what you as a producer need to do and how the buyer must perform, as well.
When you work with Nexus Ag Marketing, one of the advantages is that you don’t need to work directly with a broker or exchange, or ag industry buyer. Because we’re there to help you interpret what the opportunities mean for you and your operation.
1. Standard processor forward contracts
2. Exchange traded futures and options contracts
3. Custom processor agreements
4. Contract combinations (For example, forward contract plus a call option)
Plus, it’s good to continue the use of the open market as a component of the strategy.
“It’s a guarantee or insurance for the cattle, knowing what you’re going to get when you’re putting them in.”
— Scott Phillips