Growing the Future

Learn To Hedge: No Body Showed You

Episode Summary

Dan Aberhart opens by pointing out that every grain farmer already has millions of dollars riding on prices, whether or not they trade, and asks who is teaching them to manage it. Ryan Bonnett explains that dealerships train farmers to run machines but nobody trains them to use the marketing tools, so many people stumble in, get burned, and write the whole thing off. He tells his own story of early wins followed by a long losing streak and a coach who asked what his system was. The rest of the hour covers why discipline matters more than the choice of strategy, how options act as price insurance, how to think about crops that can't be hedged, and what he teaches in the course. Producers leave with a better question to ask about every sale they make.

Episode Notes

A grain farm carrying roughly $500 of crop per acre on 5,000 acres is carrying about two and a half million dollars of exposure to grain prices. It doesn't need an open trading account to be in the market.

Ryan Bonnett started as a 21-year-old grain merchant and later began trading his own account. He won early, then lost ten or twelve trades in a row because, as he puts it, he was trading on feel and had no system. He joins Dan to explain why almost nobody is taught how to use hedging tools, what changes when you have rules for getting in and a point where you know you're wrong, and how a farm can think about protecting the bottom end of its price. Live questions from the audience cover cross-hedging, technical analysis and how much time to give the markets each week.

What's Inside

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