The FutureTrak Program

 

The FutureTrak Program is best described as a management methodology, which allows the producer to make marketing decisions without fear of adverse future events. It addresses the two primary challenges of the farming business: the need to manage crop inventory for maximum returns and making marketing decisions with little or no knowledge of what lies ahead.

 

Applying the FutureTrak concept, the producer gains affordable protection against unexpected price movements. Armed with a marketing tool that looks and feels like an insurance policy, he can confidently make decisions based on known facts at any given moment, not on assumptions or speculation as to future events. Responding to basis issues, wide or narrow, or weather-market opportunities, for example, is no longer a difficult challenge. When dealing with operational constraints such as storage issues, logistics, or cash-flow, additional alternatives can only add to a manager's potential for success.

 

To emulate the insurance concept, FutureTrak is first and foremost a "cost based" program, employing futures options. It addresses the reality that perceived cost, or risk, greatly influences marketing decisions. The cost must be affordable, because no other price is acceptable. It follows that cost is a function of compromise, which is the foundation of the FutureTrak program.

 

Properly designed option strategies, reflecting market conditions and operational constraints (such as high debt), are the key to cost control. Catching most of the advance or avoiding most of the decline, consistent with your needs, is the program objective. As conditions change (for example, weather or seasonal issues), protection levels and cost may be adjusted accordingly. You can have all the protection you desire, but you should avoid paying too much and carrying it for too long.

 

With low-cost choices at your disposal, you will be much better equipped to respond to the opportunities that the  markets infrequently offer. Luck or fate will no longer be the primary factor in determining the net returns of your operation. While you cannot predict the future, you can certainly participate in it.

 

To put things in perspective, the wisdom of today's decision won't typically be known for months, perhaps many months. Having some assurance that future adverse events won't nullify today's effort can put the fun back into running your business. Simply said, recognize the opportunity, determine the most appropriate strategy by applying the FutureTrak principles, and then execute that strategy.

 

 

Let's enumerate what FutureTrak may do for you:   

                                                     

Plan with confidence

Take advantage of basis opportunities

Net income depends less on luck and fate

Take advantage of early season market rallies

The impact of adverse future events is diminished

Optimize management of your individual operation

Decisions are based on known facts, not assumptions

Gain greater control over your minimum level of income

Affordable recourse offers important marketing choices

More closely align market risk with changing conditions

Avoid interest, elevator, and other costs associated with long-term storage 

Limit exposure to the vagaries of weather, politics and other market influences

 

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Information and research contained herein is for information and educational purposes only and should not be relied upon in isolation or construed as a guarantee of future performance.  Neither the information, nor any opinion expressed, shall be construed as a solicitation to buy or sell any equities or futures contracts mentioned herein.   The risk of loss when trading futures and/or options on futures is substantial.