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Northern Illinois | IMO the first leg of a marketing plan for 2013 would be to purchase 85% RA insurance. That limits your exposure from a loss of income.
Your next goal should be to not put all of your eggs in one basket so to speak. You can start making small sales of cash and/or HTA over the course of the next 10 months. You will not hit the high but you will not get the low either. There is no way to know what the cash price will be next fall so you do risk missing out on a $2 move higher but with RA insurance you are protected to a degree. If you are worried about a wild run higher you can cover cash or HTA sales with a OTM call but that will eat up operating money unless you go way out of the money. If we do see a spring time rally to buy acres and prices move above the insurance price that may be a good time to buy put options at the insurance price level.
The last couple of years the best thing to do is do nothing and wait because prices have improved later in the marketing year. Many believe that this year will be simular with better prices coming later. But you are trying to out guess the market by doing that. If it works great but.......... | |
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Small operation marketing plan for 2013?
