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Very little chance for price recovery. Why buy Fall price protection ?
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Posted 3/13/2019 08:48 (#7377310 - in reply to #7377033)
Subject: RE: Very little chance for price recovery. Why buy Fall price protection ?

humblefarmer - 3/13/2019 05:58

JP I read your comments and appreciate your input. But really , price already knows we are NOT going to have a 2012 event ? And to clarify I am not expecting a 2012 type event , based solely on the weather we've had this winter. Also there are several pieces to the insurance puzzle. Insurance level (70%-75%-80%-85%-etc)is a different discussion vs whether to HPE or not. I think we might agree that in the end we are talking about nothing more than "comfort" levels. Or what path we take to reach our comfort level.

Hi humble,
Yep. It comes down to what you are comfortable with. "Here" the only choices are 85%RP or 85%RPwHPE. If I am not at that level, I might as well self insure. It's always possible that this year is the year we get a localized drought. But our soils hold water very well. And the odds of a localized drought taking more than 40 bushel off my APH - enough to trigger the lower coverages is pretty slim.

Regarding your other points, I would respectfully disagree and say its all on price. If you are in the camp that price will go up most likely because of a supply issue, then it's not that much of a leap to say a drought of the magnitude of 2012 isnt going to happen this year. Price movement is nothing more than the expression of energy. When I look at the weeklies and monthlies there is almost nothing outside of a higher low that I can point to and say its bullish. And on the dailies, the most recent move higher couldn't even reach the ML- on a flat fork to boot- and now it has fallen out of the LML. None of that is supporting a moon shot higher. And if you are honest with yourself, the best we will see is price staying range bound til it builds supporting market structure for a move higher which chews up precious time needed to get price substantially higher or we go lower.....neither of those scenarios promote a fall price substantially higher than we got this spring. 2012 supported the rally we got. Today if I was a betting man. I would say if you are going to trigger the revenue side of the RP policy, it will be because of low prices not high ones. And thus my decision to take HPE.

Take care
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