The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
I have had lots of guys tell me as of late there is absolutely no need for them to make sales in new-crop corn since we are trading well under the spring revenue insurance guarantee of $4.62. This could be very dangerous logic and something you need to make sure you really understand, especially for those producers who have little to any currently priced. I put together a simple graphic (below) that will give you a better idea of why I'm concerned. What we have to first understand is that most producers have "revenue" related policies. In other words they are based on an equation that consists of: (your APH x the spring guarantee of $4.62) less ("total" new-crop bushels produced x the spring guarantee of $4.62). What many folks fail to realize is the fact if you produce a crop that is substantially above your APH (which as of right now looks to be the case for many here in the US), then prices might have to drop below $3.50 per bushel before you see any type of insurance check. Take the time to meet with your insurance agent and carefully work ALL of the numbers and variables associated with your specific operation. Click here to receive my daily newsletter
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