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| Cowboy, use the spreadsheet you downloaded. If the price is lower in the fall than in the spring, your guaranteed bushels increase, to equal the original guaranteed dollars per acre.
If you are guaranteed 100 bu with an 80% CRC/RA policy, with a $4.00 spring price, and the fall price is $2.00, your guarantee must now be 200 bushels. That is because it now takes 200 bu X $2.00 futures to equal your dollars per acre guarantee of $400 (the original total of $4.00 X 100 bu).
This year, we are going to start with close to $4.00 futures, and if the fall price drops to $3.00, we would now be guaranteed 133% X our original bu guarantee.
As far as basis inverting, it is true, you would lose the difference between contracted lower basis and fall higher basis, but only on non produced bushels. You could do a HTA, or futures only contract. Again, with $4.00 corn these are all problems I am gladly dealing with.
Rob Heyen | |
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Crop Contract vs insurance guarantee???
