All Rallies End

July 13, 2012 07:57 AM

We are not saying the rally is over in new-crop corn and soybean futures, but the risk is real that a high has been posted. That’s why we advise holding put options against 40% of expected 2012 corn production ($6.50 Dec.) and 25% of expected soybean production ($14.00 Nov.). If the rallies have ended, these puts will provide protection against lower prices. If the rally continues, these puts could be worthless, but cash-price gains would more than offset the premium paid for the insurance against lower prices.

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