Setting the ladder
The ladder's first rung belongs near breakeven or the first profit level the market realistically offers most years, because a ladder that never starts is just storage with extra steps. Space the rungs by meaningful increments, often ten to twenty cents in corn depending on the year's price level, and decide the starting date and the final deadline when any unsold tranches get priced regardless. Write it down before the season and hand a copy to your broker or marketing partner so someone besides your own mood knows the plan. The method fails only one way: when the seller overrides it in the middle.
How the method works
Decide the increments in advance: the price steps, the percentage sold at each step, and where the ladder starts, typically near breakeven or the first target above it. As the market trades up through each step, you sell that tranche without debate. The result is an average sale price that sits comfortably in the upper part of the year's range in rising markets, without requiring you to know where the top is.
The trade-off is honest. In a falling market, the ladder never fills and you have sold little, which is why scale-in schedules pair with time stops or a floor set by harvest. In a runaway bull market, your average will trail the top. Accept both in advance. The method's value is discipline, not clairvoyance.
Why it suits hedgers
- No top-picking. The most common marketing failure is refusing to sell on the way up and panic-selling on the way down. A ladder prevents both.
- Emotionally survivable. You are always partly right: selling into strength feels good, and unsold bushels are gaining when the market runs.
- Compatible with any tool. Forward contracts, futures, and options can all fill the ladder. Futures trading involves substantial risk of loss and is not suitable for all investors.
- Works with carry. Later tranches can be priced for post-harvest delivery when the market pays storage.
CCS built a program around it
The Scale-In hedge program at CCS applies this logic through forward contracts rather than futures, which means no margin calls and no daily settlement while the ladder fills. It was designed for producers who want disciplined, incremental pricing without managing a futures account through every weather scare. A broker-assisted account can run the same discipline with futures and options if you prefer those tools.