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Honored Advisor

Re: "Don`t sell a quiet market..

Most of us run of the mill farmers on here, don`t want to make money shorting the market, a common reply would probably "if I could do that, why farm?".   What I think most of us are looking for is, we have a crop on hand to market and we`d like a reasonable profit.  The Board of Trade to us should only be used as a vehicle to achieve that.  For instance sell the Board and buy a call to capture upside if we`re wrong, crop insurance being the safety net.   I know that`s elementary, but that`s most of our comfort levels.  

The Market to Market weekly gurus speak on our level.  I know it isn`t sexy, but it insures that the Farm Bureau Century Farm sign stays up at the end of our driveways.  Smiley Happy

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Honored Advisor

Re: "Don`t sell a quiet market..

good statement...

One problem Crop insurance is not a safety net.... unless you don't need it..... Crop insurance works that way only once..... from that point on the rates go up and the yields drop .  You gotta plant a new crop you haven't planted before to have coverage or get out for a few years.

Grain sorghum and wheat used to be the prominent dry land crops in the sw.... 2011-2014  drought years took the yields down to coverage of about $80 per acre max with a minimum of $40 an acre premium.   So you either run with no coverage--my favorite... or you change to dry land corn for cheaper a $16 premium on $120 production.   After a couple of bad years your out again........ mostly because we are in a rotation with wheat and fallow and it takes 20 years to grow your yield back to affordable levels.

I think the best indicator of federal support  is the loan rates..... look at that and you'll see that usda does not care about profitability  all they want is acres planted....... and Time is right, the futures markets will offer a speculator a profit nearly every year but is not intended to provide profitability.

(If you carry that last set of thoughts out very far you'll get to the conclusion that usda and congress think as little of small agriculture banks as they do producers.   Until both need food stamps and then if your lucky,  you might qualify.)

They keep handing the big banks billions while the small banks struggle to survive.

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Honored Advisor

Re: "Don`t sell a quiet market..

What I mean "crop insurance a safety net" is if you use it to hedge with confidence that you`ll be able to go up to your APH yield, that`s a benefit that a farmer has over a trader in Manhattan wearing pajamas, sipping a latte as he "buys Dec corn".   However, I`m in the bib overall group  that buys Revenue Assurance crop insurance 85% on corn and use that as an excuse to not hedge and pull the trigger  Smiley Happy 

 But it seems "profitable prices" for new crop usually only come as you`re combining the old crop corn and gone in a flash...no "acreage battles" no "weather scares"  no "planting delay rallies"  You need to sell, often times before spring crop insurance prices are set in March or profitability Poof! is gone in a flash.

The BTOs who are accused of "selling their crop multiple times to make a profit" probably are on to something.  That is above my ability and comfort zone...if I sold a crop multiple times, I`d lose 3 times as much   Smiley Happy

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