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Commodity Price Risk Management in Australia â€“ A Dare to be Average!
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Growers need to consider a portfolio approach to their grain marketing including a combination of passive and active management coupled with some on farm storage if the market is telling you to store grain... Demand will create its own supply (something that many farmers will emphasise with over the past 2 years as supply has expanded rapidly in response to high grain prices, leading to prices to fall) and as argued by Malcolm (2009) "food supply will meet food demand in the future, provided farmers receive the correct market signals and are not thwarted by poor government policies that create perverse incentives.".. Since there "is no reliable way to identify the fund managers who will outperform the market, investors do best to buy a broad spectrum of stocks at the lowest cost" (Damato, 2001)...
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