Most of the hedge activity in the past month from the advisers in the Archer Financial Services Ag Hedge Program focused on adjusting positions. As talk of lower yields crept into the market, the advisers became more conservative with their sales and actually lifted some hedge positions, says Scott Harms of Archer Financial.
The average hedge positions of the advisers dropped 4% for 2011 crop corn to 55%, while the 2011 crop soybean hedge positions climbed by 9% to 69%, Harms says. The 2012 hedge levels for corn and soybeans stand at near 20% as of Sept. 1.
"Hedge activity might begin to pick up in the coming months as more is known about the size of this year’s crop and the advisers become more confident in their expectations for the value of corn and soybeans," he adds.
Pro Farmer is one advisory service that did place a re-ownership strategy in soybeans this past month. "We did it because of the trend in the market," says Pro Farmer editor Chip Flory. "We had higher soybean yield expectations in mind at the time we did the buyback, but the upside momentum in the market meant we were too heavily sold. For a relatively small and known risk, we could buy the call option to regain upside potential and get our risk balance back to a more comfortable level.
"Looking back, we should have stayed right where we were," Flory notes. "We knew that was a risk, which is why we decided on the call option."
If you have any questions or comments regarding the track record information, contact Mark Soderberg or Scott Harms of Archer Financial Services, Inc., at (800) 933-3996.
- October 2011