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SW MN and Gold Canyon AZ | This is the exact reason why one should use options in these volitile markets. Puts leave the top side open, basis open, carry options open and place of delivery open. In these markets one needs to sell his product more than once or give yourself that option. All my new crop sales are and will be using puts @ this time.I can always cash contract later if the prices rise beyond my expectations.
You could buy calls against those contracts but what if the market has topped??
Figure out how many bushels you have left to sell and divide them in increments and buy puts if the prices increase. If they go way beyond what you are expecting you can always sell some 2009 crop.If you have a short crop you don't have to deliver on those puts. Crop insurance will cover you.If the market goes down from here you still could buy puts or do nothing and have a pretty good average.
We spend 35$ an acre to buy crop insurance, whats wrong with spending 40 or 50$ an acre for price insurance?? | |
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Soybean sales - damage control
