Why is Crop Insurance and Risk Management Important?
Feb 23, 2011
Tuesday was a tough day for the grains with both corn and soybeans going “limit down” during the day session. At current prices, I spent the majority of my day talking with clients as if I was their shrink.
It also showed another example of the benefits for crop insurance. While we saw corn and soybeans go limit down on the CME board it only decreased the average of our spring price guarantee by 1 cent in corn and 6 cents in soybeans.
Although yesterday’s closing price in soybeans was $12.74 the spring price guarantee average is currently at $13.60. In corn the closing price was $5.82 and the insurance average is at $6.03. There are only 4 days left to determine the spring price guarantee.
Once we determine what the spring price guarantees we can add another piece of the puzzle that we call risk management. It will clarify what our floor is for a percentage of our grains from an insurance standpoint. It is then up to us as producers to determine how much exposure we want in a market that is already experience limit day movements even before we have anything in the ground.
If you have any questions about insurance or how to incorporate insurance and grain marketing feel free to either ask me in the comment section of this blog or contact me at Jamie@gulkegroup.com
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