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Current Market Highlights

Dec 12, 2022

By Austin Behrendsen, CFE Grain Originator

*Current contract pricing may differ based on the market.
If you have any questions or would like to discuss any option, give me a call
at 712-720-7431.
 

Old Crop Corn:

July 2023 Weekly Flex Floor Advantage

  • Very customizable
  • The basic concept of this is that the farmer pays option cost to have a floor price, while maintaining upside potential
  • Prices bushels on a weekly basis. The farmer can customize the pricing period.
  • Delivery is June / July 2023
  • You can leave basis open until mid-June. Basis month is June/July 2023

Example:

          CN23 Weekly Flex-Floored Advantage
          CN23 Board Price: 640.75

          Start Date: December 9, 2022
          End Date: June 23, 2023
          Period Range: 29 Weeks
          Floor: 600.00
          Cost: 15.50
 
  • Each week that the referenced futures contract settles at or below the Floor, 100% of the weekly quantity is priced at the Floor
  • Each week that the referenced futures contract settles above the Floor, 100% of the weekly quantity is priced at that day's settlement

Minimum Price

  • Similar to the Flex Floor (above). The main two differences are the bushels are already delivered and basis is priced the day you do this contract

July 2023 Example:

  • Sell cash today @ $6.82
  • Buy a July 2023 6.80 call for $0.25
  • Establish a cash floor of $6.57
  • Unlimited upside above 6.80 July futures with the long call option. Price by 6/23/2023

New Crop Corn:

Cost of production will likely be the highest ever for the 2023 growing season. Farmers were provided a very nice profitability safety net last year via elevated spring crop insurance prices. Those prices for the upcoming growing season will be set as usual during the month of February. The biggest risk farmers face today are prices dropping prior to spring crop insurance prices being set. In the meantime, the market has to digest the very important January report and South American weather.

HTA + Bonus Premium

  • Sell 2,000 bushel of Dec 2023 Futures @ 5.92
    • 5 cent HTA fee
  • Add a ‘Bonus Premium’ with a 6.50 strike and collect $0.26 of premium
  • 6.50 strike is a secondary offer on 2,000 bu. if Dec 2023 futures are @ or above 6.50 on 10/27/23

**Add the $0.26 premium to your 2,000 bushel initial sale of 5.92 to get a price of 6.18. Secondary offer of another 2,000 bushel @ 6.50.

Accumulator No Double Up With Knock-out

This is a more popular contract because it does not have a double up feature. However, I do not prefer this contract because you have a lot of risk if the market goes down. If you are okay with that risk of knock-out then this would be a contract for you.

Grain-Contract-Spotlight-12-9-(1).jpg


Euro Accumulator

This is similar to the contract above, but it offers $.255 more premium, the knock out risk is slightly less and you do have double up risk if the Dec 2023 futures are above 6.48 on 10/27/23.

Grain-Contract-Spotlight-12-9-2-(1).jpg
 

Old Crop Soybeans:

Minimum Price

July 2023 Example:

  • Sell cash today @ $14.70
  • Buy a July 2023 15.60 call for $0.56
  • Establish a cash floor of $14.14
  • Unlimited upside above 15.60 July futures with the long call option. Price by 6/23/2023

Cash Sales / Offer Buys

Soybeans have had a nice rally since harvest time and volatility remains in the market. Therefore, there is nothing wrong with doing cash sales and/or placing offer buys above the market.


New Crop Soybeans:

Cash Sale + Bonus Premium

  • Sell 1,000-bushel @ $13.37 cash price
  • Add a ‘Bonus Premium’ with a 15.40 futures strike and collect $0.40 of premium
  • 15.40 strike is a secondary offer on an additional 1,000 bu. if Nov2023 futures are @ or above 15.40 on 10/27/23

**Add the $0.40 premium to your 1,000-bushel initial sale of $13.37 to get a price of $13.77. Secondary offer of another 1,000 bushel @ 15.40.
 

Accumulator No Double Up With Knock-out
This contract has been a popular one as of late. Knock-out risk is high.

Grain-Contract-Spotlight-12-9-3-(1).jpg

Euro Accumulator

Grain-Contract-Spotlight-12-9-4-(1).jpg



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