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Latimer Iowa | Main thing I get out of the charts and marketing professors was something from my dad. (Full disclosure my degree and college experience is in finance, stocks, venture capital, and not ag marketing.) He was in Ag Ops at Iowa State with a guy that was just back from Vietnam. They were sitting in the back of the class and the professor was drawing lines, talking about options, puts, complicated "strategies" with paper. The guy from Vietnam asked a question, professor gave a know it all answer on how the charts were the solution, then the vet just said to the whole class "if you (the professor) are so damn smart, why aren't you rich and not here teaching us about charts?" Class was pretty quiet for a while after that. So I personally, do not put much value in your "400 level marketing classes".
The point I was making is that the Government (whole different conversation) is providing us a revenue guarantee up to 95% of expected revenue. It is another tool to be able to use. Selling ahead on paper and using the crop insurance as a backstop has much less risk then holding unpriced grain in a bin. A farmer can take pricing opportunities on rallies when there is a positive margin/return per acre and RP insurance allows lifting those hedges when/if prices return to crop insurance guarantee levels. The tools can be used to work together. After the harvest price is set, there is no more government sponsored hedge, and the risk profile fully returns. This is why, I maintain, selling ahead on the board, with crop insurance RP backing it up, is much less risky then unpriced grain in a bin. One just has to know it is a hedge on paper and be disciplined enough not to oversell that guarantee. | |
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Down .15 corn and .50 beans
