|
| At what point do you "buy" futures?
GRIP payment will be factored on final price and final county yield. Example would be if your assigned county or expected yield is 150 BPA and the current CBOT price is $3.50, assuming a 150 yield would put indemnity to around $39 bucks per acre. This is of course before your premium. However much of that depends upon final yield. If the county yielded 160 BPA and the price went to $3.30, the indemnity is about the same. (around 35 bucks) However if you were to buy futures to protect the indemnity at $3.50 you would have lost 20 cents per bushel, and basicly lowered your revenue by another $30 per acre if you bought futures on 150 BPA corn
Also the final yield will not be set until Feb even tough the price will be set in the fall wich I think is actually set like CRC using OCT ave. of December futures. (I could be wrong on that one)
Also, there were plenty of agents in Jan through March giving free advice on how to use GRIP. A few even indicated that you did not have to use options if you used grip or CRC indicating that the 2 (put options and GRIP) did the same thing. I still dont see how that is true. On way to sort of capture the GRIP "indemnity" would be to roll 380-390-400 puts lower. I dont have the 390 or 400 puts but thinking about rolling the 380's lower to capture some equity and be in better position if the market rallies. This only works if the 380's were bought when December corn was higher. If I bought into the crop insurance agents theory I would be sitting here with no downside coverage. | |
|
GRIP Insurance
