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| Okay, I am new here so forgive me if I sound like I don't know what I am talking about (I admit that I don't!). We have a milo crop in the ground right now on our farm. Though it looks good right now, there is no rain at all in our forecast and there is a good chance it won't produce anything. With the prices where they are, we would like to contract the number of bushels we are insured for with the local elevator. We would buy corn futures or options, but we are not very experienced with the markets and don't want to hassle with hedging using a different crop than what we are growing (although the milo seems to be moving exactly in line with the corn right now).
First of all, does that plan sound okay? Secondly, at what price (in terms of Dec 12 corn) should we be waiting for to contract out? We were thinking maybe $7.50 for corn (which would be $7 cash price for our milo). That would guarantee us a decent profit. However, with the extent of this drought, prices look like they could also go quite a bit higher. So, we might just contract out half of the bushels and wait a little longer on the rest. I don't know.
What price would you contract at? Are you waiting for a target price to make your hedges? I realize that there is no real way to tell where the market will end up and no real right or wrong answer, but what strategy are you using? | |
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What Price Are You Waiting For?
