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S Illinois | Perhaps but what how much would you need per acre to insure your neighbors farming operation?
Right now 4.85 Dec 27 puts are around 40 cents. Say 200 bu APH @ 80% coverage means it cost $64/acre in the market to guarantee $4.85 on 160 bushels. There will be time decay so let’s call it $50 on Mar 1. This doesn’t include any risk for yield loss which depending on the area can be anywhere from half of the cost of the price coverage(so price coverage is 2/3, yield is 1/3)to double(price risk is 1/3, yield is 2/3 of the cost)depending on county loss ratios.
There was a reason private crop insurance never was a thing and why it took until the government subsides went over 50% that widespread use of federal crop insurance was adopted. | |
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subsidies
