Posted 6/12/2019 11:40 (#7554931 - in reply to #7554850) Subject: PP Bean Formula
South Central Iowa
If you get to your PP date with soybeans to plant, do this calculation. Remember that you are unlikely to yield as well as planting in May, some might, most won’t.
(PP Guarantee + Soy Variable Inputs) / Guaranteed Bushels - Basis = Price You Need To Plant Late
Variable inputs are seed, fertilizer, chemical, custom equipment, machine operating costs, interest; not fixed machine payments or land cost, those are there regardless of if you plant or don’t. Don’t expect your yield to be better than your guaranteed yield, it probably won’t be. If you plant it though, you have to factor your basis, so subtract it. 50 bushel aph at 80% example.
(50 x $9.60 x 80% x 60%) = $230.40 PP Guarantee
($230.40 + $150) / 40 bushel - -90c = $10.41
With a -90c Basis, you need the price to be $10.41 on the board to plant. We are at $9.05 ish right now. Here is what it looks like if we plant it all and you could still get $9.05 board.
($9.05 - $0.90) x 40 - $150 = $176
$176 likely versus $230.4 bird in the hand.
Plant MFP crop as cover and get that payment. Likely a boost to coverage as discussed a couple days ago. You can still buy a $9.60 call to protect upside. The market is doing to little too late.