All risk in the rice price begins with the one who is marketing it. No decision is free of risk: selling at harvest, holding all year or refusing to make use of futures and options. Risk has a statistical component and it has a psychological component. Until the psychological component is dealt with, your selling performance will suffer.

Much of the insight into a market is more obvious than not. We often know what we need to do and we do not do it. You need to sleep at night and that is no small thing to purchase. The Chinese, who are expert rice traders, have a saying: “Wealth can buy you a bed but it cannot buy you sleep.”

The best medication for sleep is to have a marketing plan with selling objectives before the season commences and the cash on hand to implement it effectively.

A good friend and above average marketer of rice told us recently that when the market is profitable you should sell your rice and leave the last 10 percent of the market you expect to others. Does that sound strange to you? It is the urge to hit the high that causes so many problems to farmer sellers. We call it “market regret.”

You cannot overcome that market regret until you admit to your own innate greed and fear. Market rumors spun by unscrupulous people or ignorant people will undermine your resolve. The rice market is an unbalanced whirlpool of “market spin.”

The stories in the news section on Web sites, which come from various news agencies, are full of bias and hidden agendas. You must always ask, “Who is saying this and what do they have to gain from getting me to accept it whether it is true or not?”

You will question your decisions when the market goes against you or it sits like paint drying on a wall and goes nowhere for long periods of time. If you do not use futures and options, you will limit your range of motion in the market substantially.

When you sell cash, you are done in cash. Such a narrow and confining choice range makes you a reluctant seller. A farmer should always be in the market. It is like working out: if you miss your trip to the gym, you get weak and flabby again.

With the use of futures and options you can again own a market trend or sell your crop more than once. You have flexibility by using futures and options but even more critical you can reduce the regret and the sleepless nights as the market soars past your price objectives. For example, you can buy long call positions to replace part of your sold rice and consider it “sleeping medication.”

If prices do not rise, you know the extent of your extra cost, which translates into a lower effective selling price. You essentially sell your rice for the price you receive in the cash market minus the cost of the option premium. This is just part of leaving the last 10 percent for someone else. If the price explodes past your pricing point, you still have a little skin in the game. This skin in the game can diminish or remove your regret.

If you can sleep at night when the market gyrates wildly, then your relationship with your spouse will improve immensely.

Even Wall Street gets sentimental at times. There is the story of a trading unit that did a bad job trading the Japanese yen. The head of the trading department brought in a huge cactus and encouraged the traders to go over and hug the cactus before thinking about over-speculating. Holding cash rice is speculating until it is sold. Holding cash rice with no marketing plan deserves a big bear hug on that cactus plant.

For 18 years, Milo Hamilton ran price risk and procurement operations for Uncle Ben's Inc. Five years ago he co-founded Firstgrain Advisory Services and the Web site www.firstgrain.com.