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north central Oklahoma | Hey guys, slow to find this forum, but have been searching last day or so and like what I see. I only hope I can contribute a portion of what I have gained in only a few days.
How many are contracting (forward hedge either on CBT or local Co-ops) at these recent more attractive prices? I haven't started yet, but had a recent vision of "why should I". I may be all wet in my logic on this, but that is why I am posting this here to get anyone else's 2 pesos.
I am relatively new to corn, since '04, but like it in my rotation of wheat, soybeans, and corn here in north central Oklahoma. ( and yes I'm no Sooner, hence the name cowboycorn) '06 was a true trainwreck in this area, but my banker has more faith in me sometimes than I do and I'm going back with close to 500 acres corn this year. With the recent change in our T-yield here, one can guarantee himself around $200/acre just with crop insurance. What I'm arguing with myself about is why should I go contract the same grain. At 70 bushel "T" and 70% CRC and now close to $4/bu price projection thanks to February strength, $200/ac is a lock in. Remember, this isn't Iowa or Minnesota so don't laugh at these yields or guarantees, it's what we have to work with here on upland/DRYland.
If I raise less than 50 bushel and the price drops also, insurance gurantees the balance. If I contract now to protect some of these prices and it goes up, I don't get the increase, but I also don't get a decrease if it goes south either, I am protected. I am not one prone to coulda, should, woulda. I'm guaranteed almost $4/bu with insurance with no margin fee, and no worry about delivery of contract bushel should I not raise the grain., having to buy the balance of contract back. Instead of my insurance covering my contract shortness, I can keep the insurance proceeds. BTDT. I know; what if I raise 100 bushel corn, and it is a doable thing here, and prices go to $4.50+, but remember this IS Oklahoma., and west of that magic line called I-35 where rain seldom ventures.
What am I missing here? I'm gonna shoot for the best crop I can, but a total failer is better than a decent crop (50-60 bu)at these insurance levels, at least I wouldn't spend $25+ to harvest it. An 80 to 100 bushel yield would make me very happy, but I am trying to be realistic.
Any thoughts.
Thanks,
cowboy out | |
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Crop Contract vs insurance guarantee???
