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south central WI | The DRP (if that's the one with the 5 mil cap) seems like a win. If I understand what was explained to me, the first quarter will pay out. I would use the 5 mil cap in the first quarter.
I've used options some, buy not much. We have an advisor that we've used for the past few years. The first year we made a decent profit using options. Last year was about even, never really checked. There was a couple times he advised me to buy a put, but I was a little upset at the time. Milk had climbed to the $16.50-17 range. I asked about selling some. He said it was my choice but they weren't recommending it. Everything was looking good etc. Then when milk dropped to the $15 dollar range he suggested buying a $0.30-35 put. I asked why would I want to guarantee myself a $14.70 floor (15-0.30) when selling for $17 was not recommended. Times and prices change. Focusing on the missed sale made me lose some money on the options.
When the govt opens back up I will possibly/probably use their plan. When prices are tight it's hard to spend another $0.30-35 on a floor. The govt program will cut that cost in half or more. I was told the prices are roughly a nickel for the 1st quarter and an extra nickel for each extra quarter. 4th quarter would be roughly $0.20. I haven't looked at average prices lately but I think you could get a $15.70 floor for 3rd quarter for $0.15-0.20. That's a reasonable price to lock in a decent floor. With the way the market has been falling off in the current months, spending a dime to lock in the 2nd quarter would be money well spent IMO. If the trend continues, I could make decent money on that. If the market drastically improves, I wont miss that dime. | |
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Milk price futures/thoughts
