GLOBAL agricultural prices of wheat, corn, soybeans and nearly everything else have moved materially higher over the past six weeks or so.
The driver has been written about ad nauseam, and in much better fashion than I would be able to articulate.
To summarise, the Brazilian corn crop has had a shocking season, while demand (especially out of China) has been amazingly strong, so the global feed complex is historically tight and hence prices have been rallying.
These production issues and subsequent rallies are a fantastic opportunity for Australian growers.
Over the past three years, high prices have been a result of the Australian drought, where yield deficiencies have been the driver of massive prices.
The current offshore rally is driven by the plight of growers in predominantly Brazil, Canada, and parts of the US.
The opportunity for Australian growers is in the ability to take some price risk off the table for new season wheat and canola at very attractive levels.
The December-21 Chicago Board of Trade (CBoT) Wheat Swap briefly traded at $358 per tonne, while the MATIF November-21 Rapeseed Swap traded over $840/t a couple of weeks back.
Now for those who haven't had the start to the cropping season we'd hope for, waiting for a break in the weather is absolutely fair.
However, for those who have and are normally active in grain marketing around this time, these opportunities need to be capitalised on.
When markets are tearing higher, its often the case we get reluctant and expect the rally to continue and therefore do nothing.
On top of this, if we expect prices to keep rising, we think of the decision to buy or sell as binary (i.e. if I think prices will go higher, I wont sell anything).
This is where we run into trouble, as what goes up must come down, as we have seen in global wheat markets in the past week or so.
Not selling into the rally or when the Swap was $350/t was to say, I am happy to have 100 per cent of my crop estimate exposed to higher prices from here.
This is a risky proposition.
The question was not should I take this opportunity to sell at these prices or not, it was how much of my production should I protect at these levels?
If we sold 10pc to 20pc at these prices, and the rally marched on, would we be unhappy with 80pc to 90pc of our future production exposed to this outcome, unlikely.
In reality, the CBoT Dec-21 Wheat Swap has fallen about $40/t recently.
This has happened in a blink of an eye, catching all those holding off selling by surprise.
The market very well might turn back higher from here, it has plenty of reasons to do so.
For those who were disciplined in their price risk management, they can rest easy knowing they have some protection on if prices continue to move south.