Death comes to us all. Life's but a walking shadow | Crop insurance companies buy & sell futures & options in order to hedge their exposure. Does anyone have any idea what percentage of the futures open interest this might be? Is it possible that this activity could significantly effect price levels? What percentage of corn acres and price are insured? For example, in order to hedge their exposure you would expect them to sell futures to protect against a price drop below threshold for revenue products. If they had significant selling could they drive the price below threshold. Buying options might be better because they wouldn't pay out until they reached the strike price but would cost a certain portion of the premium.
Insurance company executives are invited to comment.
Does the fact that FSA acres is the majority of USDA planted/harvested acres indicate the majority of corn & bean acres are insured? Is that evidence that insurance company hedging must be significant? Where would that show up on the Commitment of Traders, swap dealers as third parties or other reportables?
PS: Remind me what the spring insurance price is again.
PPS: Is it possible that insurance companies buy enough in Oct to prevent a price trigger? It seems to me that the price always stays up just enough until Nov. 1. Is that coincidence or on purpose?
Edited by 1234 9/2/2014 10:23
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Crop insurance companies hedging.
