Fundamental Outlook Frayne Olson, PhD Crop Economist/Marketing Specialist Director – Burdick Center for Cooperatives [email protected]701-231-7377 (o) 701-715-3673 (c) NDSU Extension Service ND Agricultural Experiment Station Dept. of Agribusiness & Applied Economics
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Fundamental Outlook...DTN ProphetX – 07/14/2021 pm Dec. CBOT Corn Contract Highs • Dec. 2008 contract: Jun. 27, 2008 at $7.99 • Dec. 2011 contract: Jun. 10, 2011 at $8.00 •
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Fundamental OutlookFrayne Olson, PhD
Crop Economist/Marketing SpecialistDirector – Burdick Center for Cooperatives
July 12, 2021 WASDE Report & USDA – Feed Grains Data Base Table 4
USDA – Agriculture In Drought
USDA – Crop Progress – 07- 12- 21
Crop Progress – Corn Condition
USDA – Crop Progress – 07- 12- 21
Crop Progress – Corn Condition
USDA Office of the Chief Economist – USDA Lockup Briefing – July 12, 2021
Continuous Nearby CBOT Soybean Futures Prices
DTN ProphetX – 07/14/2021 pm
Nov. CBOT Soybean Contract Highs
• Nov. 2008 contract: Jul. 3, 2008 at $16.37• Nov. 2011 contract: Aug. 31, 2011 at $14.65• Nov. 2012 contract: Sep. 4, 2012 at $17.89• Nov. 2013 contract: Jun. 12, 2013 at $15.59• Nov. 2014 contract: May 22, 2014 at $15.37
Continuous Nearby CBOT Corn Futures Prices
DTN ProphetX – 07/14/2021 pm
Dec. CBOT Corn Contract Highs
• Dec. 2008 contract: Jun. 27, 2008 at $7.99• Dec. 2011 contract: Jun. 10, 2011 at $8.00• Dec. 2012 contract: Aug. 10, 2012 at $8.49• Dec. 2013 contract: Jan. 31, 2013 at $7.44• Dec. 2014 contract: May 9, 2014 at $5.23
Mid-Summer Marketing Plan:My Opinion
• What is your risk tolerance?• Avoid cash market based forward contracts
that require delivery.• Focus on selling futures contracts at targeted
price points.– Can be quickly off-set of production levels are
lower than expected.• Purchase Put Options.
– Premiums will be high due to price volatility.
Mid-Summer Marketing Plan:Example
• Assume:– Soybean APH is 40 bu./a. and 1,000 acres– Have cash forward contracted 10 bu./a. (10,000
bu.)
• Current yield estimate is 30 bu./a.• Price an additional 10 bu./a. using futures
contracts– Sell two Nov. CBOT contracts (10,000 bu.)
Mid-Summer Marketing Plan:Example
• If harvested yield is 25 bu./a., sell remaining 5 bu./a. after harvest.– Off-set futures position when soybeans are sold at
harvest.• If weather remains hot and dry, can off-set
(repurchase) one contract (5,000 bu.) at any time.– 5,000 bu. remain hedged.– No delivery is required– May be gain or loss on repurchase.– Must work with registered broker and there is
exposure to margin calls.
Questions?
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