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SW MN and Gold Canyon AZ | Poet does these minimum price contracts. I sold some last week for $4.90----cost was a dime to go long the DEC contract @ $5.20--------I have the right to cash in that long contract anytime between now and NOV 22.
Right now I have a $4.80 cash floor(delivering the corn this week and get paid that amount). Dec corn closed @5.50 on friday so if I wanted to cash it in I could get .30 added to my $4.80 or $5.10
I also give them the right to buy equal amount of bu for fall delivery @7$DEC. minus basis if the price closes at or above 7$ on NOV 21. You have wide basis risk on this contract for the new crop but not the old.
I figure old crop .07 basis is a sell , the carry is not there so just as well be long paper. AND I have my money and a floor. My topside is WIDE OPEN. I have NO risk of downside movement on the cash.
I did these last year and they worked out very well.
In volitile markets, floors with the topside open are the only way to go. | |
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