As we look forward in risk management for producers it is very hard not to look at the fundamental data and with recent price movements and have concern that grain prices will not be significantly lower toward the end of the year. Although we are very light on subsoil moisture in many areas in the country but we also have a weather premium already built into the futures markets which will probably lessen the movement to the upside. If the weather become more favorable along with the fundamental data the price movement to the downside could be significant.
Take a good look at the fundamental information out there and it should volumes to you about why you purchase the highest levels of crop insurance that you can. If we are setting up for the possibility of low prices at the end of the year and into next year this is the time to protect as much as you can with the insurance spring price.
Bottom line is that we do not have want to be in a situation that we NEED a drought to keep above breakeven.
If the drought persists and prices go much higher a producer will still be very happy that they bought a high level of coverage along with the harvest price option and you only need to look back to 2012 to see how beneficial it was.
If you have any questions contact me at 707-365-0601 or email me at [email protected]