Lock in Low Rates with LIBOR futures
Most farmers know that they can hedge their corn, wheat or beans (or about any other agricultural commodity) using various types of futures contracts. You can use the regular contract, options – both calls and puts, spreads, etc.
However, many farmers do not know that they can hedge their operating loans interest rates using LIBOR futures. The Top Producer site has a quick good article on how this might work.
I believe that short-terms rates are about as low as they can get right now and it might be very prudent locking in your operating loan rate for 2010 or 2011 at a fairly nominal cost.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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