Posted 12/7/2018 07:39 (#7154873 - in reply to #7154763) Subject: RE: Andrews Forks
tslinden - 12/7/2018 06:55
In an attempt to apply things that some of you pointed out to me earlier this year about andrews forks, I generated one this morning on the May 19 corn contract.
My main question is, did I pick the correct three "pivot points"?
I chose the May '19 contract since I have a May call option @ $3.80. My reasoning for this is to try to "cover" some of the 2018 bushels that I was forced to sell ahead of harvest on cash fall delivery contracts. Due to storage (or lack thereof), I always have a percentage of pre-harvest bushels that I need to sell cash out of the field. At the end of the marketing year, these are consistantly my lowest priced bushels when compared to bushels that I sell using HTA's then later locking in carry and basis.
The goal of my "plan" is to try to narrow the gap between the pre-harvest sold bushels on HTA's that hit the bins in the fall and the pre-harvest sold bushels on cash new crop contracts that have to go to the elevator in the fall.
The general rule of thumb is pick the market extremes on the pivots. Might not always be the prettiest set of lines, but its the ones with the probabilities built in.