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| Sat/Marty- I'd be more than happy to share some stats and also some of my thoughts, the same thoughts I've already shared with you thru text messages. Maybe this will help all involved be on the same page. As I've said before, available for a talk any time.
For starters, let's make sure a few things are straight. Grain companies do use managed marketing contracts as origination tools but in return have the responsibility and all the reason in the world to provide as good as performance and/or highest price as possible. Do remember that all farmer sales and hedges are transacted thru CBOT as the risk is not held but instead passed off to the CBOT so the myth of buying as low priced grain as possible needs put to rest - it's absurdly false. Same goes with buying high priced grain and the market going lower - it has no impact. At the same time, business 101 would tell you that it's a hope that the farmer is able to and does sell or hedge the whole production of their operation at higher prices than resulting prices from managed marketing programs. That is why a small percentage of production is enrolled in these programs instead of a large percentage. Having a goal to be the "highest price" is an unrealistic goal and approach. "Value at risk" should be understood. At times, especially in "unfortunate" times, the phrase "Past performance is no guarantee of future results" needs to be remembered and reviewed.
To address your requests:
Basis must be locked in prior to delivery but can be done at any point during the pricing periods
Delta equivalent, must be between 0-100% hedged. No more no less. Can adjust % hedged at any point based upon opinion of market environment. Here-in lies the risk of trading. There are no guarantees.
Pros and cons is pretty easy. There is risk of performance. Tapping into the opinion and mindset of an organization that may naturally "see more" of the marketplace can provide benefits but once again, comes with risk. Everybody will have different opinions of success. Regardless of opinion the goal is to help. Unfortunately, anything with risk has no guarantees.
So with that, here is rolling 3 calendar year stats for corn/soy fall delivery programs. Program month, length of pricing period and price payable to producer followed by contract high/low during the program pricing periods (Jan to Oct, 9 months for 1 year programs or 21 months for 2 year programs).
Corn
Dec' 14 1 year $4.77 H $5.13 L $3.20 3/4
Dec '15 2 year $5.03 H $5.04 L $3.57 1/2
Dec '15 1 year $4.22 H $4.54 1/4 L $3.57 1/2
Dec '16 2 year $4.50 H $4.49 L $3.14 3/4
Dec '16 1 year $3.89 H $4.49 L $3.14 3/4
Soybeans
Nov' 14 1 year $12.31 H $12.79 L $9.05 1/2
Nov' 15 1 year $9.73 H $10.45 L $8.53 1/4
Nov' 16 2 year $10.18 H $11.86 1/4 L $8.59 1/4
Nov '16 1 year $8.26 H $11.86 L $8.68
-Jarod | |
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I Will Invite
