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plan for corn in storage... need money now
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GrainTrader
Posted 5/2/2012 14:20 (#2365533)
Subject: plan for corn in storage... need money now



20 Miles West of Indianapolis Indiana

i've got about 5000 bu of corn left of old crop i was wanting to hold on to till roughly the end of june to see if there was a run up in the market before harvest. i could really use the money right now to put down on a farm...

what is a good option strategy and how much would it cost to re own these bushels without going long one July corn? (i'm going to withdraw a lot of my trading acct also for down payment and really can't risk the margin money right now)  I can trade all day but can't for the life of me get puts/calls figured out myself....

EDIT: just cause i said i can trade all day doesn't mean i'm any good at it i just understand why the market moves the way  it does sometimes! LOL



Edited by GrainTrader 5/2/2012 14:21
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northmofarm
Posted 5/2/2012 14:27 (#2365541 - in reply to #2365533)
Subject: Re: plan for corn in storage... need money now


Prices are real real good right now compared to where they may be in the not too near future. It will take a major summer drought to hold these corn prices and as my post below says there are e plants paying 40 cents a bu over board price for June delivery. If you really understand options you will know how one can really lose a bunch of money quick in this market. I'd be a seller and enjoy your new purchase.
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J,ReinkeFarms
Posted 5/2/2012 19:30 (#2365816 - in reply to #2365541)
Subject: Re: plan for corn in storage... need money now


Sell now, don't worry about marketing them again and be happy.
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ibuyyc
Posted 5/2/2012 14:38 (#2365548 - in reply to #2365533)
Subject: RE: plan for corn in storage... need money now


Sell the corn on a basis only contract, and take an advance on it. Most places will do at least a 70% advance. You will get a good chunk of the money now and still have the opportunity to catch any uptick on the board (it could always go down though). If we do get a run up on the board you might also come out a few cents ahead as I see basis weakening if we get CN in the $6.40 to $6.60 range.
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mcfly
Posted 5/2/2012 15:07 (#2365577 - in reply to #2365548)
Subject: Re: plan for corn in storage... need money now


Northeast Iowa		You have to maintain 70% tho so if the market drops its almost like margin money because you have to pay back your advance.
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FromtheFlats
Posted 5/2/2012 23:22 (#2366319 - in reply to #2365533)
Subject: Re: plan for corn in storage... need money now


EC IL		dude let it go... buy your ground you want and don't look back. Not sure what 5k bushels is to your operation but big or small you should let it go. If you can not i understand, then a basis contract is your best bet. Basis is strong and carry is weak so rolling should not be to bad.
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uofiben
Posted 5/2/2012 23:30 (#2366333 - in reply to #2365533)
Subject: Re: plan for corn in storage... need money now


Basis Contract, Have you seen the basis lately, my local basis is +34N for immediate delivery. That is not a sustainable basis, futures will catch up, the cash market will not sustain the huge inverse.
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gbryce
Posted 5/2/2012 23:37 (#2366350 - in reply to #2365533)
Subject: Re: plan for corn in storage... need money now


West-Central Missouri		Well i would just figure nearby at $6.50 futures and figure a "really" good run up at 7.45 futures nearby take $.95 * 5000 = $4750 and IMO that is close to a best case scenario. I would probably not let that stop me from buying a farm if everything else seems to work.
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GrainTrader
Posted 5/3/2012 12:58 (#2367003 - in reply to #2365533)
Subject: took you all's advise to sell and not worry!



20 Miles West of Indianapolis Indiana

thanks guys for the input... got to thinking if the market really takes an uptick i've got plenty of unpriced new crop corn in the field i can take a higher price at and if it drops then i really wouldn't have an much as i'd like to put down on this farm.... will be my first farm if the deal goes through which it looks as of now like it is.

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djsmith19
Posted 5/3/2012 15:12 (#2367148 - in reply to #2365533)
Subject: RE: plan for corn in storage... need money now


PURCHASE AN AUGUST 5.70 CALL FOR .18 THIS IS .43 CENTS OUT OF THE MONEY. IF THEY LOWER OLD CROP CARRYOUT AT ANY TIME SHOULD MAKE RALLY MARKET HARD. IT WILL ALSO MAKE AUGUST TRADE MORE LIKE AN OLD CROP CONTRACT RATHER THAN NEW CROP (BASED OFF OF SEPT PRICES)
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djmcountryboy
Posted 5/3/2012 17:50 (#2367271 - in reply to #2367148)
Subject: RE: plan for corn in storage... need money now


Mascoutah, Illinois		I like your thinking with that strategy.
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