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| Your figures are correct ImTheBoss on the example you gave. I was not saying this was locking in a great profit but it is a way of making some added returns if the market rallies back to $3.86 or so then you have left $.40 on the table that you could have had in your example - $3.86 futures average during October - $3.46 = cost of the option and strike price of $3.40 = $.40 times 175 bushel = $70.00 per acre of lost revenue - should it occur.
Some reasons we could rally are: I see noncommercial traders added to their net long futures and options in the last CFTC report, the Middle East situation is concerning vs. what may happen to some oil fields and thus we could see higher crude oil prices, the RIF ruling could come down on raising the blending back up some, Russia could threaten to boycot the EU nations over Ukraine sanctions creating a higher oil price thus more potential for ethanol exports (even though we are running at a very fast pace), later season yields could show potential for a lower yield than the current figure for key states as MN, IA, and NE. Funds have made a great profit on shorting this market and the end of the month and end of quarter arrives on 9-30. The wet weather forecast by NOAA to start 9-29 and continue over most of the corn belt to at least 10-7 may cause some market concerns as well.
I am not sure what is going to happen but at these price levels, I see good chances for the market to rally once the down trend stops. Perhaps the $3.25 DEC 14 corn price will be an early fall low.
Edited by Citi Farms 9/23/2014 15:14
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RE: Revenue Fall Pricing Protection
