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Coops and elevators suspending or moving cash bids to mitigate market volatility

Some grain merchandisers are going to extreme measures to offset wild market swings.

Iowa State University Extension economist Chad Hart says some cooperatives have suspended cash bids, while others have moved to deferred contracts.

“Incredibly volatile situation in the marketplace (and) we’ve seen prices move dramatically in both directions, (so) the coops and elevators are sort of caught in between. They’re both buying and selling the grain at the same time, so they’re seeing this volatility on both ends.”

He tells Brownfield moving to deferred contracts will cut into the premium farmers have been enjoying.

“You’re probably not capturing the high swings that we’ve been seeing over the past few days, but it’s still offering a really great price as we look out there.”

Hart expects the cash bid suspensions to be a short-term phenomenon and says the move to deferred contracts will provide a more stable market environment for both buyers and sellers.